The following data report the occupancy rates (%) and average room rates ($) for the largest U.S. hotel markets (The Wall
Street Journal Almanac 1998).
We would like to know the linear relationship between the two rates with the occupancy rate in terms of average room rate.
Room Occupancy Average
Market Rate (%) Rate ($)
Los Angeles-Long Beach 67.9 75.91
Chicago 72.0 92.04
Washington 68.4 94.42
Atlanta 67.7 81.69
Dallas 69.5 74.76
San Diego 68.7 80.86
Anaheim-Santa Ana 69.5 70.04
San Francisco 78.7 106.47
Houston 62.0 66.11
Miami-Hialeah 71.2 85.83
Oahu Island 80.7 107.11
Phoenix 71.4 95.34
Boston 73.5 105.51
Tampa-St. Petersburg 63.4 67.45
Detroit 68.7 64.79
Philadelphia 70.1 83.56
Nashville 67.1 70.12
Seattle 73.4 82.60
Minneapolis-St. Paul 69.8 73.64
New Orleans 70.6 99.00
Write out the estimated linear regression equation in the context of the problem.
Are the two rates correlated? Justify it by testing the slope.
Interpret your result. (Don't forget to write the hypotheses, and don't use the correlation coefficient as you have done in 1181)
Provide a 95% interval estimate of the real average occupancy rate with an average room rate of $90. Interpret the interval.
Provide a 95% interval estimate of the real occupancy rate with an average room rate of $90.
Interpret the interval.
Are the data homoscedastic? Justify it by using the appropriate graph and interpret the result.
How does the result in part (e) affect parts (c) and (d)?