Consider the table below which displays the price of a commodity for six consecutive years.   Year Price (dollars) 1 250 2 255 3 253 4 255 5 259 6 261   Use the method of least squares to fit the model E(Yt) = β0+ β1t to the data. Write the prediction equation. Use the prediction equation to obtain forecasts of the prices in years 7 and 8. Find 95% prediction intervals for years 7 and 8.

Question

 Consider the table below which displays the price of a commodity for six consecutive years.

 

Year

Price (dollars)

1

250

2

255

3

253

4

255

5

259

6

261

 

  1. Use the method of least squares to fit the model E(Yt) = β0+ β1t to the data. Write the prediction equation.
  2. Use the prediction equation to obtain forecasts of the prices in years 7 and 8.
  3. Find 95% prediction intervals for years 7 and 8.

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