Question

Waterbury Insurance Company wants to study the relationship between the amount of fire damage and the distance between the burning house and the nearest fire station. This information will be used in setting rates for insurance coverage. For a sample of 30 claims for the last year, the director of the actuarial department determined the distance from the fire station (x) and the amount of fire damage, in thousands of dollars (%). The MegaStat output is reported here: df ANOVA table Source Regression Residual Total SS 1,805.5782 1,275.4934 3,081.0716 MS 1,805.5782 45.5533 F 39.64 28 29 Regression output Variables Coefficients Intercept 1,381,345 Distance-X 300, 415 Std. Error 3.0963 47,717.0465 t(df=28) 3.475 6.3 Click here for the Excel Data File a-1. Determine the regression equation. (Round your answers to 3 decimal places.) y = X.

Answer 1

a-1)          
y=1381345+300415*x          
          
a-2)          
direct          
          
b) estimated damage=1381345+300415*7=   3484250      
c-1) coefficient of determination = SSR/SST=1805.5782/3081.0716=   0.586      
c-2) 58.6%          
d-1) correlation coefficient,r= √0.586=   0.766      
d-2) positive          
d3) positive, positive          
e1) reject Ho if t <   -2.763   or t >    2.763
e-2) value of test stat= 6.3          
e-3) reject, significant