Solution Found!

Statistics / Statistical Techniques in Business and Economics 15 / Chapter 13 / Problem 60

Statistical Techniques in Business and Economics | 15th Edition | ISBN: 9780073401805 | Authors: Douglas Lind, William Marchal, Samuel Wathen

Change Question

Waterbury Insurance Company wants to study the relationship between the amount of fire

Chapter 0, Problem 60

(choose chapter or problem)

Get Unlimited Answers

QUESTION:

Waterbury Insurance Company wants to study the relationship between the amount of fire damage and the distance between the burning house and the nearest fire station. This information will be used in setting rates for insurance coverage. For a sample of 30 claims for the last year, the director of the actuarial department determined the distance from the fire station (X) and the amount of fire damage, in thousands of dollars (Y). The MegaStat output is reported below. (You can find the actual data in the data set on the CD as prb13-60.)

Answer the following questions.

a. Write out the regression equation. Is there a direct or indirect relationship between the distance from the fire station and the amount of fire damage?

b. How much damage would you estimate for a fire 5 miles from the nearest fire station?

c. Determine and interpret the coefficient of determination.

d. Determine the correlation coefficient. Interpret its value. How did you determine the sign of the correlation coefficient?

e. Conduct a test of hypothesis to determine if there is a significant relationship between the distance from the fire station and the amount of damage. Use the .01 significance level and a two-tailed test.

Questions & Answers

QUESTION:

Waterbury Insurance Company wants to study the relationship between the amount of fire damage and the distance between the burning house and the nearest fire station. This information will be used in setting rates for insurance coverage. For a sample of 30 claims for the last year, the director of the actuarial department determined the distance from the fire station (X) and the amount of fire damage, in thousands of dollars (Y). The MegaStat output is reported below. (You can find the actual data in the data set on the CD as prb13-60.)

Answer the following questions.

a. Write out the regression equation. Is there a direct or indirect relationship between the distance from the fire station and the amount of fire damage?

b. How much damage would you estimate for a fire 5 miles from the nearest fire station?

c. Determine and interpret the coefficient of determination.

d. Determine the correlation coefficient. Interpret its value. How did you determine the sign of the correlation coefficient?

e. Conduct a test of hypothesis to determine if there is a significant relationship between the distance from the fire station and the amount of damage. Use the .01 significance level and a two-tailed test.

ANSWER:

Step 1 of 6

(a) General equation of the least-squares regression line:

The estimate of the constant is given in the row "Intercept" and in the column "Coefficients" of the regression output:

The estimate of the slope is given in the row "Distance- " and in the column "Coefficients" of the regression output:

Study Tools You Might Need

Chapter: 25 Problem: 6Q

Physics: Principles with Applications 6
Compare the acceleration of a motorcycle that accelerates from 80 km/h to 90 km/h with the acceleration of a bicycle that accelerates from rest to 10 km/h in the same time.

Chapter: 5 Problem: 79P

Introductory Chemistry 5
Name each acid. (a) HClO (b) \(\mathrm{HClO}_{2}\) (c) \(\mathrm{HClO}_{3}\) (d) \(\mathrm{HClO}_{4}\) Equation Transcription: Text Transcription: HClO_2 HClO_3 HClO_4

Chapter: 3 Problem: 16

College Physics 1
Problem 16CQ During a lecture demonstration, a professor places two coins on the edge of a table. She then flicks one of the coins horizontally off the table, simultaneously nudging the other over the edge. Describe the subsequent motion of the two coins, in particular discussing whether they hit

Chapter: Problem: 10

Myers' Psychology for AP 2
Interneurons are said to a. send messages from specific body parts to the brain. b. transmit and process information within the brain and spinal cord. c. act as connectors, supporting other neurons in the brain. d. send messages from the brain to body parts. e. influence the pituitary gland.

Chapter: 8 Problem: 12

Elementary Statistics: A Step by Step Approach 8th ed. 8
Internet Visits A U.S. Web Usage Snapshot indicated a monthly average of 36 Internet visits per user from home. A random sample of 24 Internet users yielded a sample mean of 42.1 visits with a standard deviation of 5.3. At the 0.01 level of significance can it be concluded that this differs from the

Chapter: 2 Problem: 2

Essentials of Understanding Psychology 11
Match the portion of the brain with its function: a. medulla 1. b. pons 2. c. cerebellum 3. d. reticular formation 4. Maintains breathing and heartbeat. Controls bodily balance. Coordinates and integrates muscle movements. Activates other parts of the brain to produce general bodily arousal.

Chapter: 14 Problem: 2

Urban Economics 8
Suppose dwelling quality is measured on a scale of 1 to 10, and the monthly cost of producing a particular quality equals the square of the quality level: For quality level 1, the cost is $1; for quality level 2, the cost is $4, and so on. The monthly rent equals the price per unit of quality (P= $9)

Chapter: 32 Problem: 2

Biology: The Dynamic Science 5
What traits in conodonts and ostracoderms are derived relative to those in hagfishes and lampreys?

Not The Solution You Need? Search for Your Answer Here:

×

Login

Login or Sign up for access to all of our study tools and educational content!

×

Register

Sign up for access to all content on our site!

Or login if you already have an account