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COMM 291 ASSIGNMENT 2 - Application of Statistics in Business (Fall 2014) Problem




Question;Question ? Association, Correlation and Simple Linear Regressiona) State whether the following statement is true or false. Explain your answer.i. The correlation of -0.78 shows that there is almost no association between a country?s GDP and Infant Mortality Rate. ii. The correlation of -0.78 between GDP and Infant Mortality Rate implies that the correlation between Infant Mortality Rates and GDP is 0.78.iii. The correlation between GDP and Country is 0.44, showing a positive linear relationship between the two variables. iv. A very high correlation (r = 1.5) is observed between a country?s per capita GDP and Living Standard Index.b) Data on fuel consumption (y) of a car at various speeds (x) were collected. Fuelconsumption is measured in litres of gasoline and speed is measured in kilometers perhour. A simple linear regression was fitted to the data, the residuals of the model werecomputed and appear in the table below.Residuals10.09 2.24 -0.62 -2.47 -3.33 -4.28 -3.73 -2.94-2.17 -1.32 -0.42 0.57 1.64 2.76 3.97Speed (x) in km/hr65 70 75 80 85 90 95 100105 110 115 120 125 130 135i. Make a scatterplot of the residuals versus speed. Describe the scatterplot. ii. Compute the mean of the residuals. Explain why you get this result.iii. Would you use the estimated linear regression line to predict fuel consumption based on speed? Explain your answer.


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