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Recall the third exam/final exam example .

We examined the scatterplot and showed that the correlation coefficient is significant. We found the equation of the best-fit line for the final exam grade as a function of the grade on the third-exam. We can now use the least-squares regression line for prediction.

Suppose you want to estimate, or predict, the mean final exam score of statistics students who received 73 on the third exam. The exam scores ( x -values) range from 65 to 75. Since 73 is between the x -values 65 and 75 , substitute x = 73 into the equation. Then:

y ^ = 173.51 + 4.83 ( 73 ) = 179.08

We predict that statistics students who earn a grade of 73 on the third exam will earn a grade of 179.08 on the final exam, on average.

Recall the third exam/final exam example .

a. What would you predict the final exam score to be for a student who scored a 66 on the third exam?

a. 145.27

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b. What would you predict the final exam score to be for a student who scored a 90 on the third exam?

b. The x values in the data are between 65 and 75. Ninety is outside of the domain of the observed x values in the data (independent variable), so you cannot reliably predict the final exam score for this student. (Even though it is possible to enter 90 into the equation for x and calculate a corresponding y value, the y value that you get will not be reliable.)

To understand really how unreliable the prediction can be outside of the observed x values observed in the data, make the substitution x = 90 into the equation.

y ^ = –173.51 + 4.83 ( 90 ) = 261.19

The final-exam score is predicted to be 261.19. The largest the final-exam score can be is 200.

Note

The process of predicting inside of the observed x values observed in the data is called interpolation . The process of predicting outside of the observed x values observed in the data is called extrapolation .

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Try it

Data are collected on the relationship between the number of hours per week practicing a musical instrument and scores on a math test. The line of best fit is as follows:

ŷ = 72.5 + 2.8 x
What would you predict the score on a math test would be for a student who practices a musical instrument for five hours a week?

86.5

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References

Data from the Centers for Disease Control and Prevention.

Data from the National Center for HIV, STD, and TB Prevention.

Data from the United States Census Bureau. Available online at http://www.census.gov/compendia/statab/cats/transportation/motor_vehicle_accidents_and_fatalities.html

Data from the National Center for Health Statistics.

Chapter review

After determining the presence of a strong correlation coefficient and calculating the line of best fit, you can use the least squares regression line to make predictions about your data.

Use the following information to answer the next two exercises . An electronics retailer used regression to find a simple model to predict sales growth in the first quarter of the new year (January through March). The model is good for 90 days, where x is the day. The model can be written as follows:

ŷ = 101.32 + 2.48 x where ŷ is in thousands of dollars.

Questions & Answers

Ayele, K., 2003. Introductory Economics, 3rd ed., Addis Ababa.
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Suppose the demand function that a firm faces shifted from Qd  120 3P to Qd  90  3P and the supply function has shifted from QS  20  2P to QS 10  2P . a) Find the effect of this change on price and quantity. b) Which of the changes in demand and supply is higher?
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Source:  OpenStax, Introductory statistics. OpenStax CNX. May 06, 2016 Download for free at http://legacy.cnx.org/content/col11562/1.18
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