Chapter 11.7, Problem 11.97ACI

Prices of recycled materials. Prices of recycled materials (e.g., plastics, paper, and glass) are highly volatile due to the fact that supply is constant, rather than tied to demand. An exploratory study of the prices of recycled products in the United Kingdom was published in Resources, Conservation, and Recycling (Vol. 60, 2012). The researchers employed simple linear regression to model y = the monthly price of recycled colored plastic bottles as a function of x = the monthly price of naphtha (a primary material in plastics). The following results were obtained for monthly data collected over a recent 10-year period (n = 120 months):

ŷ = − 32.35 + 4.82x, t = 16.60(for testing H₀ : β₁ = 0)

r = .83,r2 = .69

Use this information to conduct the first four steps of a complete simple linear regression analysis. Give your conclusions in the words of the problem.