10.34 School budget and number of students. Suppose that there is a linear relationship between the number of students x in a school system and the annual budget y. Write a population regression model to describe this relationship.

  1. (a) Which parameter in your model is the fixed cost in the budget (for example, the salary of the principals and some administrative costs) that does not change as x increases?

  2. (b) Which parameter in your model shows how total cost changes when there are more students in the system? Do you expect this number to be greater than 0 or less than 0?

  3. (c) Actual data from various school systems will not fit a straight line exactly. What term in your model allows variation among schools of the same size x?