CHEPTER # 5

SIMPLE REGRESSION AND CORRELATION

EXERCISE # 5
BY SHAHID MEHMOOD [email protected]

SIMPLE REGRESSION

Simple regression is a technique which determines a relationship between two variables to

estimate one of the variables for a given value of the other variable. The variable whose value is
to be estimated is called dependent variable and denoted by (Y) whereas the variable whose
value is given is called independent variable (X)

REGRESSION LINE

Regression line Y upon X.

.
Y = a+bX

ESTIMATION OF REGRESSION LINE Y UPON X

Regression line y on x estimated by the following equation:

y = a + bx

in the above equation

y = dependent variable.
x = independent variable.
a = a constant value and measures the y-intercept of the regression line
b = a constant value and measures the change in y per unit change in x. It is the slope of the
regression line.

b = nΣxy – ΣxΣy
nΣx2 – (Σx) 2

a= y–bx

Page 1 of 7
CHEPTER # 5
SIMPLE REGRESSION AND CORRELATION

EXERCISE # 5
BY SHAHID MEHMOOD [email protected]

Example 1
Following table based on the sales(thousands) and advertising expenses of company for last six
years
Years Advertising expanse Sales(thousand)
(millions) y
x
2015 5 2
2016 6 3
2017 8 4
2018 10 7
2019 12 8
2020 16 10

Required:
(i) Regression line for estimating sales volume
(ii) Estimate sales volume for the year 2021 if advertising expense would be 20 millions
(iii) Describe the relationship

Solution

x y xy X2
5 2 10 25
6 3 18 36
8 4 32 64
10 7 70 100
12 8 96 144
16 10 160 256
57 34 386 625

(i)regression line
y=a+bx
b= nΣxy – ΣxΣy
nΣx2 – (Σx) 2

b= 6(386) – 57(34)
6(625) – (57) 2

b= 2316 – 1938
3750 – 3249

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CHEPTER # 5
SIMPLE REGRESSION AND CORRELATION

EXERCISE # 5
BY SHAHID MEHMOOD [email protected]

b= 378 =0.75
501

a=mean of y-b(mean of x)

therefore
mean of y= Σy/n = 34/6= 5.67

mean of x= Σx/n = 57/6 = 9.5

a=5.67-(0.75)(9.5) = -1.45

y=a+bx

y=-1.45+0.75x

(ii) estimated sales volume for 2021

x =20
y= -1.45+0.75(20) = 13.55

(iii)value of b is positive hence the relationship between advertising and sales is positive

Question # 1

Given the following data, fit the regression line (y on x).

X 2.80 2.10 3.75 2.80 2.55 3.00 2.50 2.20 2.90 3.80 2.70 3.45
Y 3.94 2.63 3.20 3.57 2.25 2.80 3.40 2.00 3.70 3.97 3.20 3.90

Ans:, y=0.75X+.05

Question # 2

Given the data:

X 3 7 5 4 3 3 9 6
Y 8 3 2 2 3 4 3 7

Fit a regression line of y on x and hence estimate y if x=4.5.

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CHEPTER # 5
SIMPLE REGRESSION AND CORRELATION

EXERCISE # 5
BY SHAHID MEHMOOD [email protected]

Question # 3

Calculate the equation of the least squares regression line of y on x from the following
data.

X 1 3 3 4 5 5
Y 5 3 2 2 0 1

Ans: Y = 5.88 – 1.06X

Question # 4

An organization has collected the following data showing relationship between price charged and
quantities sold:

Price 5 6 7 8 9 10 12 13

Qty(y 590 56 555 540 52 500 480 475

0 5

i) Determine the regression line for estimating quantity .

ii) Compute the quantity that the company may produce if it wishes to sell at the price
of 18
Solution
x y xy x2
5 590 2950 25
6 560 3360 36
7 555 3885 49
8 540 4320 64
9 525 4725 81
10 500 5000 100
12 480 5760 144
13 475 6175 169
70 4225 36175 668

Regression line
y=a+bx
b= nΣxy – ΣxΣy

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CHEPTER # 5
SIMPLE REGRESSION AND CORRELATION

EXERCISE # 5
BY SHAHID MEHMOOD [email protected]

nΣx2 – (Σx) 2
b= 8(36175) – 70(4225)
8(668) – (70) 2

b= 289400 – 295750
5344 – 4900
b= -6350/444
b=-14.3

a=mean of y-b(mean of x)

therefore
mean of y= Σy/n = 4225/8= 528.1

mean of x= Σx/n = 70/8 = 8.75

a= 528.1-(-14.3)(8.75)
a=528.1+125.125 = 653.22

y=653.22-14.3x

(ii) x=18
y=653.22-14.3(18) = 257.4

Question # 5

The manager of an educational computer facility would like to develop a model to predict the
number of services calls per annum for interactive terminals based upon the age of the terminal.
sample of 10 terminals was selected. The data follows:

Terminal 1 2 3 4 5 6 7 8 9 10
No.of service 3 4 3 5 5 7 8 10 10 12
calls(y)
Age(years) x 1 1 2 2 3 3 4 4 5 5

Fit a regression line to predict the number of services calls.

Ans: Y= 0.092+0.434X

Question # 6

Compute the regression line for estimating weight (cm.) of six adults.

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CHEPTER # 5
SIMPLE REGRESSION AND CORRELATION

EXERCISE # 5
BY SHAHID MEHMOOD [email protected]

Heights(cm) x 170 175 176 178 183 184

Weight (kg) y 57 64 70 76 71 82

Question # 7

A personnel officer is studying performances of job applicants on two tests given when the
applicant contacts the firm. The first test measures mental ability; the second measure potential
for success in the job. The test-score results of a sample of eleven applicants are shown below:

Applicants A B C D E F G H I J K
Mental 37 40 36 49 36 40 39 47 32 65 27
ability(x)
Potential (y) 63 42 41 39 38 49 25 29 15 52 25

Find regression line for estimating potential for success.

Question # 8

The following data were obtained in a study of the relationship between the weight and chest
size of infants at birth:

Weight(kg) 3.71 2.31 4.30 3.21 4.32 2.75 5.52 2.15 4.41
y
Chest size 28.7 28.3 30.3 27.2 27.7 29.5 36.5 26.3 32.2
x

Compute and interpret the regression line for estimating weight.

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CHEPTER # 5
SIMPLE REGRESSION AND CORRELATION

EXERCISE # 5
BY SHAHID MEHMOOD [email protected]

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