Question

he scatter plot below shows the profit earned each month by a new company over the first year of operation. The owner writes a line of best fit equation, shown below, to model the relationship between profit earned and month. y = 2,500x - 2,500 Explain how you know that the line of best fit equation is appropriate, mentioning both the slope and y-intercept in your response.

Answer 1

The regression line fits the data well. Problem can be when there is a trend, like exponential growth, but someone still wants to use linear regression. Although in this case it seems to be okay. In other words, the data points can be found under or over the line randomly. In a problematic case is when for example, there are 5 data points next to each other under the line. Usually companies don't make profit when they're first starting.