Question: Waterbury Insurance Company wants to study the relationship between the amount of fire damage and the distance between the burning house and the nearest fire station. This information will be used in setting rates for insurance coverage. For a sample of 30 claims for the last year, the director of the actuarial department determined the distance from the fire station (X) and the amount of fire damage, in thousands of dollars (Y).

ANOVA table

Source SS dif MS F

Regression 1,864.5782 1 1,864.5782 38.83

Residual 1,344.4934 28 48.0176

Total 3,209.0716 29

Regression output

Variables Coefficients Std. Error t (df=28)

Intercepts 12.3601 3.2915 3.755
Distance-x 4.7956 0.7696 6.231

1. Write out the regression equation. Is there a direct or indirect relationship between the distance from the fire station and the amount of fire damage?

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