A fire insurance company wants to relate the amount of fire damage in major resi

Question

A fire insurance company wants to relate the amount of fire damage in major residential fires to the distance between the burning house and the nearest fire station. A sample of 15 recent fires in a large suburb of a major city is selected and the amount of damage (y, in thousand dollars) and the distance (x, in miles) are given below. X 3.4 1.8 4.6 2.3 5.5 0.7 3.0 2.6 4.3 6.1 4,8 3.8 y 26.2 17.831.3 23. 27.5 36.3 14.1 22.3 9.6 31.3 24.0 17.3 43.2 36.4 26.1 A 90% confidence interval for the slope parameter is given by (4.22, 5.61), what conclusion can we get about the slope parameter? Do not reject null hypothesis that the true slope parameter = 6 Do not reject null hypothesis that the true slope parameter = 5.28 O Do not reject null hypothesis that the true slope parameter = 4 O Reject null hypothesis that the true slope parameter 4.5 O Reject null hypothesis that the true slope parameter 5.5

Explanation / Answer

Here we can directly conclude that, if slope lies between (4.22, 5.61) then do not reject.

If slope lies outside then reject null hypothesis.

Here 4 & 6 lies outside interval so reject null hypothesis.

5.28 lies in interval ( 4.22, 5.61) so do not reject null hypothesis.

Similarly 4.5 , 5.5 lies in interval so do not reject null hypothesis.

Ans: b) Do not reject null hypothesis that true slope parameter = 5.28

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