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Hi, can someone pls help out with this question?
The regression equation Y = 3+2X has been calculated from from 6 pairs of values, with X ranging from 1 to 10. The correlation coefficient is 0.8. It is estimated that Y= 43 when X=20. Which of the following are true?
(i) The estimate is not reliable because X is outside the range of the data
(ii) The estimate is not reliable because the correlation is low
(iii) The estimate is reliable
(iv) The estimate is not reliable because the sample is small.
Answer gave option 1 & 4 as true.
I just want to know why it’s true, what are the key indications which show that option 1 & 4 are correct.
Hi
The reliability of a forecast will depend on the reliability of the data collected to determine the regression analysis. Even if the correlation is high, if we have fewer than about 10 pairs of values we must regard any forecast as being somewhat unreliable.
It says right there on the question, the X range is from 1-10 so X=20 is outside the range
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