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Daniel obtains cash from an ATM

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Daniel obtains cash from an ATM. He suspects that the rate at which he spends cash is affected by the amount of cash withdrawn during the previous visit to the ATM. To investigate this he deliberately varies the amount that he withdraws. He records for each visit to an ATM the amount withdrawn (x=SH'00') and the number of hours until his next visit(y=hours) to an ATM.

Withdrawal

1

2

3

4

5

6

7

8

9

10

X

40

10

100

110

120

150

20

90

80

130

y

56

62

195

330

94

270

48

196

214

286

 

Required:

a) Draw a scatter diagram for the above data and establish the equation for the line of best fit.     (4 marks)

b) Calculate the equation of the regression line                                                                                          (6 marks)

c) Determine the sum of squared errors(SSE) for both the equation in (a) and (b) above. Does your analysis validate the OLS argument                                                                                                                                                (8 Marks)

d) Interpret, in context, the gradient of the regression line.