Math Problem Statement

The table below gives the list price and the number of bids received for five randomly selected items sold through online auctions. Using this data, consider the equation of the regression line, yˆ=b0+b1x , for predicting the number of bids an item will receive based on the list price. Keep in mind, the correlation coefficient may or may not be statistically significant for the data given. Remember, in practice, it would not be appropriate to use the regression line to make a prediction if the correlation coefficient is not statistically significant. Price in Dollars Number of Bids 28 2 29 3 35 4 36 6 50 7 Find the value of the coefficient of determination. Round your answer to three decimal places.

Solution

To find the coefficient of determination (R2R^2), we first need to calculate the correlation coefficient (rr) and then square it. Here's the step-by-step process:

1. Data:

Price (xx)Bids (yy)
282
293
354
366
507

2. Calculating the correlation coefficient (rr):

The formula for the correlation coefficient is:

[ r = \frac{n\sum{xy} - (\sum{x})(\sum{y})}{\sqrt{[n\sum{x^2} - (\sum{x})^2][n\sum{y^2} - (\sum{y})^2]}} ]

Where:

  • nn is the number of data points (5 in this case),
  • xx represents the list prices, and
  • yy represents the number of bids.

3. Summations:

We need to calculate the following sums for the formula:

  • x\sum{x}
  • y\sum{y}
  • xy\sum{xy}
  • x2\sum{x^2}
  • y2\sum{y^2}

I'll now compute the necessary values and the correlation coefficient.The correlation coefficient rr is approximately 0.9020.902.

The coefficient of determination R2R^2, which is the square of rr, is approximately 0.8140.814 (rounded to three decimal places).

This means that about 81.4% of the variation in the number of bids can be explained by the list price of the items.

Would you like more details on how this result was obtained or how to interpret it?

Here are five follow-up questions:

  1. What does a high R2R^2 value indicate about the strength of a regression model?
  2. How would you test the statistical significance of the correlation coefficient?
  3. Could there be outliers affecting this result? How would you check for them?
  4. What are the assumptions behind using linear regression for prediction?
  5. How would you compute the regression line equation from the data?

Tip: A high R2R^2 value suggests a strong relationship between variables, but it's important to check residuals to ensure the model is appropriate.

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Math Problem Analysis

Mathematical Concepts

Statistics
Regression Analysis
Correlation Coefficient
Coefficient of Determination

Formulas

Correlation coefficient formula: r = [nΣxy - (Σx)(Σy)] / sqrt([nΣx² - (Σx)²][nΣy² - (Σy)²])
Coefficient of determination (R²): R² = r²

Theorems

Linear Regression Theorem
Coefficient of Determination Theorem

Suitable Grade Level

Grades 10-12