# Question 1

The table below shows the monthly income (in rands) of 6 different people and the amount (in rands) that each person spends on the monthly repayment of a motor vehicle.

1.1 Determine the equation of the least squares regression line for the data.  (3)

1.2 If a person earns R14 000 per month, predict the monthly repayment that the person could make towards a motor vehicle. (2)

1.3 Determine the correlation coefficient between the monthly income and the monthly repayment of a motor vehicle. (1)

1.4 A person who eams R18 000 per month has to decide whether to spend R9 000 as a monthly repayment of a motor vehicle, or not. If the above information is a true representation of the population data, which of the following would the person most likely decide on:

A. Spend R9 000 per month because there is a very strong positive correlation between the amount earned and the monthly repayment.

B. NOT to spend R9 000 per month because there is a very weak positive correlation between the amount earned and the monthly repayment

C. Spend R9 000 per month because the point (18 000 ; 9 000) lies very near to the least squares regression line.

D. NOT to spend R9 000 per month because the point (18 000 ; 9 000) lies very far from the least squares regression line.         (2)

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