Chapter 11.2, Problem 6E

a.

To determine

Find the least square fit relating selling price to taxes paid.

Find the estimator of ${\sigma }^2$ .

b.

To determine

Find the mean selling price for the taxes paid 7.50.

c.

To determine

Find the fitted value of y corresponding to $x=5.898$

Find the corresponding residual.

d.

To determine

Find the fitted ${\widehat{y}}_i$ values for each $x_i$.

Construct the graph of ${\widehat{y}}_i$ corresponding to the observed value $y_i$

Comment on the shape of the plot.

Explain whether the plot actually obtained indicate that taxes paid is an effective regressor variable in predicting the selling price.