Question: Problem 8)

In a random sample of eight military contracts involving cost overruns, the following information was obtained. x = big price of the contract (in millions of dollars) and y = cost of overrun (expressed as a percent of the bid price).

a) Draw the scatter diagram for this data.

b) Find the slope, b, and the intercept, a, for the least-squares line. Write the equation of the least-squares line.

c) Graph the least-squares line on your scatter diagram.

d) If an overrun contract was bid at 12 million dollars, what does the least-squares line predict for the cost of overrun (as a percent of bid price)?