chpt 14 Flashcards
What does simple linear regression use
- one independent variable and one dependent variable
2. uses a straight line to approximate the relationship
What does multiple regression use
- 2 or more independent variables
What are the 2 objectives for simple linear regression
- establish if there is a relationship b/w 2 variables (ie income and spending)
- Forecast new observations (ie. sales over next Qrt)
What is the dependent variable denoted by
y
what is the independent variable denoted by
x
what is the dependent variable
the variable being predicted
what is the independent variable
the variable(s) used to predict the values of the dependent variable
What is the formula for the simple linear regression
Y = B0 + B1X + E
What does Y represent in the simple linear regression model
the dependent variable
what does B0 represent in the simple linear regression model
intercept or constant
what does B1x represent
coefficient of x or slope of x
what does E represent in the simple linear regression model
error term
What does the error term account for in the simple linear regression model
accounts for the variability in y that can’t be explained by the linear relationship b/w x and y
What is the simple linear regression equation
E(y) = B- + B1x
What does E(y) represent
mean or expected value of y for a given value of x
What can we note about B0 adn B1 in the simple linear regression equation
they are known
What is the estimate simple linear regression equation
y hat = b0 + b1x
When do we use the estimate simple linear regression equation
when B0 and B1 are NOT known
What does y hat represent in the estimate simple linear regression equation
point estimate of E(y)
- provides a prediction of an individual value of y for a given value of x
What are B0 and B1
population parameters
what are b0 and b1
sample statistics to estimate B0 and B1
IF we are trying to predict sales for a given level of advertising what is the dependent and independent variable
Dependent variable - sales (y)
Independent variable - advertising expenditures (x)
what does “simple” indicate in simple linear regression
one independent variable and one dependent variable
What does “linear” Indicate in Simple linear regression
the relationship is approximated using a straight line