If $y = a + b(x - 2022)$ is a straight line trend using the least square method for the following data
|
Year (x) |
2020 |
2021 |
2022 |
2023 |
2024 |
|
Profit (Rs. '000) (y) |
2 |
3 |
14 |
5 |
2 |
Then the value of $\frac{a}{b}$ is:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → 26
Given trend equation
$y=a+b(x-2022)$
Let $t=x-2022$
Then for years $2020,2021,2022,2023,2024$
$t=-2,-1,0,1,2$
Corresponding $y$ values are $2,3,14,5,2$
Using least squares properties
$a=\frac{\sum y}{n}$ since $\sum t=0$
$\sum y=2+3+14+5+2=26$
$n=5$
$a=\frac{26}{5}$
$b=\frac{\sum ty}{\sum t^2}$
$\sum ty=(-2)(2)+(-1)(3)+(0)(14)+(1)(5)+(2)(2)$
$=-4-3+0+5+4=2$
$\sum t^2=4+1+0+1+4=10$
$b=\frac{2}{10}=\frac{1}{5}$
$\frac{a}{b}=\frac{\frac{26}{5}}{\frac{1}{5}}=26$
The value of $\frac{a}{b}$ is $26$.