Question

(2 points) The director of an alumni association for a university wants to look at the relationship between the number of years since graduation and the amount of monetary contribution an alumnus makes to the university. He collects data on 50 alumni who have made contributions this year and fits a least squares regression line to the data, with the monetary contribution as the response variable. James, one of the 50 alumni, has made a contribution which gives a negative residual. Which of the following statements must be true about James' actual contribution?

(A) It is less than the contribution predicted by the regression line.
(B) It is less than the average contribution made by the 50 alumni.
(C) Both (a) and (b)
(D) Neither (a) nor (b).

Answer 1

Answer:

(A) It is less than the contribution predicted by the regression line.

Step-by-step explanation:

The residual is the subtraction of the observed value by the predicted value.

So, if James has a negative residual, it means that his contribution is less than what was expected by the regression line.

The correct answer is:

(A) It is less than the contribution predicted by the regression line.