i. Trying to predict weekly sales with a standard error of estimate of $1,955, we would conclude that 68 percent of the predictions would not be off more than $1,955, 95 percent would not be off by more $3,910, and 99.7 percent would not be off by more than $5,865. ii. Approximately 95% of the values lie within two standard errors of the regression line.
iii. The smaller the sample, the smaller the possible error as measured by the standard error of estimate.
A) (i), (ii), and (iii) are all correct statements.
B) (i) and (ii) are correct statements but not (iii).
C) (i) and (iii) are correct statements but not (ii).
D) (ii) and (iii) are correct statements but not (i).
E) (i), (ii), and (iii) are all false statements.

Question

Quizplus · Accepted Answer

Statement (i) and (ii) are correct. Statement (iii) is false. The standard error of estimate measures the variability of the residuals, which are the differences between the actual values and the predicted values. The standard error of estimate is calculated based on the sample size, the standard deviation of the residuals, and the number of independent variables. As the sample size increases, the standard error of estimate tends to decrease. Therefore, statement (iii), which claims that smaller sample sizes lead to smaller possible errors, is false.

I Trying to Predict Weekly Sales with a Standard Error