Chapter 14.8, Problem 49E

The DATAfile named CostLiving contains the cost of living indexes and the population densities (number of people per square mile) for 61 cities in the United States. The cost of living index measures the cost of living in a particular city relative to the cost of living in New York City. San Francisco has an index of 112.15, meaning that is 12.15% more expensive to live in San Francisco than New York City. Washington DC has an index of 84.64, which means that the cost to live in Washington DC is only 84.64% of what it costs to live in New York City (Numbeo website, July 13, 2016).
a. Develop the estimated regression equation that can be used to predict the cost of living index for a U.S. city, given the city's population density.
b. Construct a residual plot against the independent variable.
c. Review the residual plot constructed in part (b). Do the assumptions of the error term and model form seem reasonable?