As an auto insurance risk analyst, it is your job to research risk profiles for various types of drivers. One common area of concern for auto insurance companiesis the risk involved when offering policies to younger, less experienced drivers. The U.S. Department of Transportation recently conducted a study in which itanalyzed the relationship between 1) the number of fatal accidents per 1000 licenses, and 2) the percentage of licensed drivers under the age of 21 in a sampleof 42 cities.Your first step in the analysis is to construct a scatterplot of the data.FIGURE. SCATTERPLOT FOR U.S. DEPARTMENT OF TRANSPORATION PROBLEMU.S. Department of TransportationThe Relationship Between Fatal Accident Frequency and Driver Age4.53.532.51.510.56.1012141618Percentage of drivers under age 21Upon visual inspection, you determine that the variables do have a linear relationship. After a linear pattern has been established visually, you now proceed withperforming linear regression analysis. The results are as follows:TABLE. LINEAR REGRESSION OUTPUT FOR U.S. DEPARTMENT OF TRANSPORTATION PROBLEMCoefficientsStandard Errort Statisticp-valueIntercept-1.59740.3717-4.29790.0001Percent Under 210.28710.02949.76710.000020...00Fatal accidents per 1000 licenses 1.50.56.101214161820Percentage of drivers under age 21Upon visual inspection, you determine that the variables do have a linear relationship. After a linear pattern has been established visually, you now proceed withperforming linear regression analysis. The results are as follows:TABLE. LINEAR REGRESSION OUTPUTFOR U.S. DEPARTMENT OF TRANSPORTATION PROBLEMCoefficientsStandard Errort Statisticp-valueIntercept-1.59740.3717-4.29790.0001Percent Under 210.28710.02949.76710.0000The p-value for "Percent under 21" in the regression output is p = 0.0000. The t test for significance in simple linear regression isHo: B1 = 0Ha: B1 # 0Use alpha = .05. What does the p-value tell you about the estimated regression line?O p= 0.0000 indicates that the slope of the estimated regression line is zero, a significant relationship does not exist between the two variables, and Ho should be rejected.O p= 0.0000 indicates that the slope of the estimated regression line is zero, a significant relationship does not exist between the two variables, and Ho should not berejected.O p= 0.0000 indicates that the slope of the estimated regression line is not zero, a significant relationship exists between the two variables, and Ho should be not berejected.O p = 0.0000 indicates that the slope of the estimated regression line is not zero, a significant relationship exists between the two variables, and Ho should be rejected.. .. .001.Fatal accide

P value is the value that indicates the probability of the null hypothesis being correct. It is used…

Answered: nsurance risk analyst, it is your job…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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