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Q.1 The Conference Board produces a Consumer Confidence Index (CCI) that reflects people’s feelings about general business conditions, employment opportunities, and their own income prospects. Some researchers feel that consumer confidence is a
CCCI Income ($1000)
a) Determine the equation of the regression line 8 37.415
used to predict the CCI from the median household 68.3 35.015
income 90.5 36.770
62.6 35.237
65.9 34.710
91.6 35.122
125.3 37.010
100.0 35.887
103.7 36.106
b) What is the value of b1? Interpret its meaning in this problem
c) Conduct an appropriate test to decide whether median household income is a good predictor of CCI. Use the following ANOVA table:
Source of Variability SS df MS F
Regression 2872.32 1 2872.32 17.32
Error 1160.89 7 165.84
Total 4033.21 8
d) Use the ANOVA table to determine the coefficient of determination. Explain its meaning in this example. What is the value of the
e) If the median income for the next year is $35,000, what would be the predicted CCI?
f) Find a 95% prediction interval for the CCI in a year in which the median household income is $35,000.
(g) Find a 95% confidence interval for the average CCI for years in which the median household income is $35,000.
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