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. Age of Bus Annual Maintenance
(years) Cost ($)
1 350
2 370
2 480
2 520
2 590
3 550
4 750
4 800
5 790
5 950
a) 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?
Let x represent the age of the bus.
If required, round your answers to two decimal places
b) 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?
c) How much of the variation in the sample values of annual maintenance cost does the model you estimated in part (a) explain? (need in %)
d) What do you predict the annual maintenance cost to be for a 3.5 year old bus?