SUPPLEMENT 2

DERIVATION OF SIMPLE REGRESSION FORMULAS FOR SLOPE AND Y INTERCEPT

Derivation of the formulas for the slope and y intercept involve using calculus partial derivative techniques to minimize the sum of squares of error (SSE):

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Taking the partial derivative of SSE with respect to b0 and setting it equal to 0 (to minimize):

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Taking the partial derivative of SSE with respect to b1 and setting it equal to 0 (to minimize):

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