where ui is an unobserved error term.
(a) Use linear regression analysis to obtain estimates for a and b (i.e.,a and b).
(b) Provide an interpretation for the estimate of b. What is the interpretation for a ?
(c) Compute the set of residuals for this regression model.
(d) Use the residuals to compute an estimate for the standard error of the regression
equation (s).
(e) Calculate the coefficient of determination for this model (i.e., the R2) and interpret
it.
(f) Use a significance level of 0.05 to establish if b is statistically different from zero.
(g) Construct the ANOVA table and compute the F-test for the overall significance of the regression relationship. How is this test related to that constructed in (g)?
(h) Use a significance level of =0.05 to establish if b is statistically different from minus one. Interpret this result.