59.      The Transactional Records Access Clearinghouse at Syracuse University reported data showing the odds of an Internal Revenue Service audit. The following table shows the average adjusted gross income reported and the percent of the returns that were audited for 20 selected IRS districts.

 

 

 

 

 

 

 

 

    District   Adjusted Gross Income ($)   Percent Audited Los Angeles 36,664 1.3 Sacramento 38,845 1.1 Atlanta 34,886 1.1 Boise 32,512 1.1 Dallas 34,531 1.0 Providence 35,995 1.0 San Jose 37,799 0.9 Cheyenne 33,876 0.9 Fargo 30,513 0.9 New Orleans 30,174 0.9 Oklahoma City 30,060 0.8 Houston 37,153 0.8 Portland 34,918 0.7 Phoenix 33,291 0.7 Augusta 31,504 0.7 Albuquerque 29,199 0.6 Greensboro 33,072 0.6 Columbia 30,859 0.5 Nashville 32,566 0.5 Buffalo 34,296 0.5   Â

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

a.       Develop the estimated regression equation that could be used to predict the percent audited given the average adjusted gross income reported.

b.       At the .05 level of significance, determine whether the adjusted gross income and the percent audited are related.

c.       Did the estimated regression equation provide a good fit? Explain.

d.       Use the estimated regression equation developed in part (a) to calculate a 95% con- fidence interval for the expected percent audited for districts with an average adjusted gross income of $35,000.