Waterbury Insurance Company wants to study the relationship between the amount o

Question

Waterbury Insurance Company wants to study the relationship between the amount of fire damage and the distance between the burning house and the nearest fire station. This information will be used in setting rates for insurance coverage. For a sample of 30 claims for the last year, the director of the actuarial department determined the distance from the fire station (X) and the amount of fire damage, in thousands of dollars (Y. The Megastat output is reported below. ANOVA table Source SS df MS Regression 1,870.5782 1 1,870.5782 41.23 Residual 1,270.4934 28 45.3748 3,141.0716 29 Total Regression output Variables Coefficients Std. Error t (df 28) Intercept 13.4867 3.1191 2.21 Distance 5.2718 8.691 6.43 (a-1) Write out the regression equation. (Round your answers to 4 decimal places.) (a-2) is there a direct or indirect relationship between the distance from the fire station and the amount of fire damage? E. The relationship between distance and damage is direct (b) How much damage would you estimate (in dollars) for a fire 4 miles from the nearest fire station? (Round your answer to the nearest dollar amount. Omit the sign in your response Estimated damage

Explanation / Answer

a1) y=13.4867+5.2718 X

b) X=4

Y=13.4867+5.2718 *4 =34.5739 ~ 35

c1) coefficient of determination=SSR/SST = 1870.5782/3141.0716 = .59

c2)5.2718

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