Question: Dun & Bradstreet reports, among other things, information about new business incorporations and number of business failures over several years. Shown here are data on business failures and current liabilities of the failing companies over several years. Use these data and the following model to predict current liabilities of the failing companies by the number of business failures. Discuss the strength of the model.
y = βo β1x ε
Now develop a different regression model by recoding x. Use Tukey's four-quadrant approach as a resource.
|
Rate of Business Failures (10,000)
|
Current Liabilities of Failing Companies ($ millions)
|
|
44
|
1,888
|
|
43
|
4,380
|
|
42
|
4,635
|
|
61
|
6,955
|
|
88
|
15,611
|
|
110
|
16,073
|
|
107
|
29,269
|
|
115
|
36,937
|
|
120
|
44,724
|
|
102
|
34,724
|
|
98
|
39,126
|
|
65
|
44,261
|