Chapter 14 Simple Linear Regression

Chapter 14 Simple Linear

Regression

Outline

The Simple Linear Regression Model

Regression Model the Regression Equations Estimated Regression Equation

The Least Squares Method The Coefficient of Determination

Correlation coefficient

Measures of Association Between Two Variables

Chapter 3 section 5 Covariance Correlation Coefficient

1

Covariance ? conceptual formula

Sample Covariance

Sample variance

Positive values indicate a positive relationship.

Negative values indicate a negative relationship.

Correlation Coefficient

Sample Correlation Coefficient

The coefficient can take on values between -1 and +1:

Values near -1 indicate

Values near 0 indicate

Values near +1 indicate

a strong negative

no linear relationship.

a strong positive linear

linear relationship.

relationship.

rxy= -1

rxy= 0

rxy= +1

Equations for calculation

Sample covariance applied equation

2

Algebra 1 Review

Draw a line between two points (x2,y2)

General line equation

where, m is the slope

(x1,y1) Intercept b

b is the intercept

(you need the slope and one point)

Simple Linear Regression

Draw a line among many points General line equation

where, b1 is the estimated slope

Intercept b

b0 is the intercept

(you need the slope and one point)

Example: Armand's Pizza

xi

yi

250

Quarterly Pizza Sales

200

150

100

50

0

0

10

20

30

14

130

Student Population

3

Example: Armand's Pizza

x

y

Pop Sales

(000) ($000)

2 58

6 105

8 88

8 118

12 117

16 137

20 157

20 169

22 149

26 202

140 1300

X2 4 36 64 64

144 256 400 400 484 676 2528

y2 xy 3364 116 11025 630 7744 704 13924 944 13689 1404 18769 2192 24649 3140 28561 3380 22201 3278 40804 5252 184730 21040

Determine the slope = 5

Example: Armand's Pizza

x

y

Pop Sales

(000) ($000)

2 58

6 105

8 88

8 118

12 117

16 137

20 157

20 169

22 149

26 202

140 1300

X2 4 36 64 64

144 256 400 400 484 676 2528

y2 xy

3364 11025

116 630

Determine the intercept

7744 704

13924 944 13689 1404

= 60

18769 24649

2192 3140

Write the regression equation

28561 3380

22201 3278

40804 5252

184730 21040

What is the estimated quarterly pizza sales for a store with 8 thousand students on campus?

with 15 thousand students?

Quarterly Pizza Sales

250

200

150 135 100

50

0

0

10 15 20

30

Student Population

4

Quarterly Pizza Sales

250

200

150

100

50

0

0

10

20

30

Student Population

Quarterly Pizza Sales

250

200

150

100

50

0

0

10

20

30

Student Population

8 thousand students

88 100 118

5

20 thousand students

149 160 169

Seven Steps of Hypothesis Testing

Where:

1.

You believe there is a positive relationship

between X and Y

Where:

1.

You believe there is a negative relationship

between X and Y

4.

0

4.

0

5. Use Excel

5. Use Excel

6

EXCEL Regression Output

6. .0000255 < .01,Reject Ho, Accept Ha The sign of the slope must correspond to the alternate hypothesis

7. Student population is significant.

7

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