Question

Han creates a scatter plot that displays the relationship between the number of items sold, x, and the total revenue, y, in dollars. Han creates a line of best fit and finds that the residual for the point (12,1000) is 75. The point (13,930) has a residual of -40. Interpret the meaning of -40 in the context of the problem.

Answer 1

A residual of -40 indicates that the actual revenue was $40 less than the predicted revenue for selling 13 items, showing slightly lower performance than expected by the model.

Step-by-step explanation:

The residual of -40 for the point (13, 930) on a scatter plot with a line of best fit represents the difference between the observed value of y (total revenue) and the predicted value of y for the given x (number of items sold). In the context of the problem, a residual of -40 means that the actual revenue was $40 less than the revenue predicted by the regression equation for selling 13 items. This could imply that the actual sales were slightly less successful than expected according to the model's predictions.