## During the recession that began in 2008

Q 8 )

During the recession that began in 2008, not only did some people stop making house payments, but they also stopped making payments for local government services such as trash collection and water and sewer services. The following data have been collected by an accountant who is performing an audit of account balances for a major city billing department. The population from which the data were collected represents those accounts for which the customer had indicated the balance was incorrect. The dependent variable, y, is the actual account balance as verified by the accountant. The independent variable, x, is the computer-generated account balance.

X

233

10

24

56

78

102

90

200

344

120

18

Y

245

12

22

56

90

103

85

190

320

120

23

Compute the least squares regression equation. (2 marks)

b. If the computer-generated account balance was 100, what would you expect to be the actual account balance as verified by the accountant? (2 marks)

c. The computer-generated balance for Timothy Jones is listed as 100 in the computer-generated account record. Calculate a 90% interval estimate for Mr. Jones’s actual account balance. (3 marks)

d. Calculate also a 90% interval estimate for the average of all customers’ actual account balances in which a computer-generated account balance is the same as that of Mr. Jones (part c). Interpret your results. (3 marks)

QUESTION 9

A real estate agent wishes to determine the selling price of residences using the size (square feet), and whether the residence is a condominium or a single-family home. A sample of 20 residences was obtained with the following results:

(a). Produce a regression equation to predict the selling price for residences using a model of the following form: (2 marks)

Where,

(b). Interpret the parameters β1, and β2 in the model given in part a. (2 marks)

(c). Produce an equation that describes the relationship between the selling price and the square footage of (1) condominiums and (2) single-family homes. (3 marks)

(d). Conduct a test of hypothesis to determine if the relationship between the selling price and the square footage is different between condominiums and single-family homes. (3 marks)