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# What is the relationship between the price of crude oil and the price

you pay at the pump for gasoline? Table 6 contains the price (\$) for a barrel of crude oil (Cushing, Oklahoma, spot price) and a gallon of gasoline (U.S. average conventional spot price) for 181 weeks, ending June 14,  2013.  Develop a simple linear regression equation to predict the price of a gallon of gasoline using the price of a barrel of crude oil.  The first few rows of data are below:

-Pick the appropriate interpretation of R².a. For every 1 unit of Crude Oil, Gasoline increases by 0.036.
b. For every 1 unit of Gasoline, Crude Oil increases by 0.036.
c. 71.56% of the variation in Crude Oil is being explained by Gasoline.
d. 71.56% of the variation in Gasoline is being explained by Crude Oil.

2 . if I wanted to test the hypothesis that Ho: β1 = 0, what is the p-value to test this?
a. 450.45
b. 21.2239
c. .000118
d. 9.326e-51

3 . Referring to Table 6, if I wanted to test the hypothesis that Ho: β1 = 0, what is the decision to this?
a. We do have evidence that Gasoline is a significant predictor of Crude Oil.
b. We do have evidence that Crude Oil is a significant predictor of Gasoline.
c. We do not have evidence that Gasoline is a significant predictor of Crude Oil.
d. We do not have evidence that Crude Oil is a significant predictor of Gasoline.

4 . Using Table 6, construct a scatter plot with the price of oil and the price of gasoline. From this plot you conclude:
a. The linearity assumption is met.
b. The linearity assumption is violated.
c. The normality assumption is met.
d. The normality assumption is violated.

5 . Referring to Table 6, look at the Residuals vs. Crude Oil plot.  From this plot you conclude:
a. The equal variance assumption is met.
b. The equal variance assumption is violated.
c. The normality assumption is met.
d. The normality assumption is violated

6 . Referring to Table 6, plot the residuals versus the time period.  Is there evidence of positive autocorrelation, negative autocorrelation, or neither?
a. Positive
b. Negative
c. Neither

7 . Referring to Table 6, compute the Durbin-Watson statistic.
8 . Referring to Table 6, what is dU using alpha = 0.05?  (Pick the closest to our n from the table.)
9 . Referring to Table 6, at the 0.05 level of significance, what do you decide about autocorrelation?
a. There is evidence of positive autocorrelation.
b. There is no evidence of positive autocorrelation.
c. We are unable to arrive at a definite conclusion.

10 . Referring to Table 6, what is the lower limit of a 95% confidence interval around the slope, β1?