Chapter 4, Problem 5P

The regional transit authority for a major metropolitan area wants to determine whether there is a relationship between the age of a bus and the annual maintenance cost. A sample of 10 buses resulted in the following data:

1. a. Develop a scatter chart for these data. What does the scatter chart indicate about the relationship between age of a bus and the annual maintenance cost?
2. b. Use the data to develop an estimated regression equation that could be used to predict the annual maintenance cost given the age of the bus. What is the estimated regression model?
3. c. Test whether each of the regression parameters β₀ and β₁ is equal to zero at a 0.05 level of significance. What are the correct interpretations of the estimated regression parameters? Are these interpretations reasonable?
4. d. How much of the variation in the sample values of annual maintenance cost does the model you estimated in part (b) explain?
5. e. What do you predict the annual maintenance cost to be for a 3.5-year-old bus?