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# simple2 - Simple Linear Regression Model The equation that...

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Simple Linear Regression Model y = b 0 + b 1 x + e where: b 0 and b 1 are called parameters of the model , e is a random variable called the error term . The simple linear regression model is: The equation that describes how y is related to x and an error term is called the regression model .

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Estimation Process Regression Model y = b 0 + b 1 x + e Regression Equation E ( y ) = b 0 + b 1 x Unknown Parameters b 0 , b 1 Sample Data: x y x 1 y 1 . . . . x n y n b 0 and b 1 provide estimates of b 0 and b 1 Estimated Regression Equation Sample Statistics b 0 , b 1 0 1 ˆ y b b x
Estimation Process Unknown Relationship Population Random Sample Y X i i i b b e 0 1 i i i X Y e b b ˆ ˆ ˆ 1 0

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