Chapter 14, Problem 67SE

The Transactional Records Access Clearinghouse at Syracuse University reported data showing the odds of an Internal Revenue Service audit. The following table shows the average adjusted gross income reported and the percent of the returns that were audited for 20 selected IRS districts.

District	Adjusted Gross Income ($)	Percent Audited
Los Angeles	36,664	1.3
Sacramento	38,845	1.1
Atlanta	34,886	1.1
Boise	32,512	1.1
Dallas	34,531	1.0
Providence	35,995	1.0
San Jose	37,799	0.9
Cheyenne	33,876	0.9
Fargo	30,513	0.9
New Orleans	30,174	0.9
Oklahoma City	30,060	0.8
Houston	37,153	0.8
Portland	34,918	0.7
Phoenix	33,291	0.7
Augusta	31,504	0.7
Albuquerque	29,199	0.6
Greensboro	33,072	0.6
Columbia	30,859	0.5
Nashville	32,566	0.5
Buffalo	34,296	0.5

1. a. Develop the estimated regression equation that could be used to predict the percent audited given the average adjusted gross income reported.
2. b. At the .05 level of significance, determine whether the adjusted gross income and the percent audited are related.
3. c. Did the estimated regression equation provide a good fit? Explain.
4. d. Use the estimated regression equation developed in part (a) to calculate a 95% confidence interval for the expected percent audited for districts with an average adjusted gross income of $35,000.