EXAMPLE 2.10 The Least-Squares Idea
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Figure 2.10 illustrates the idea. This plot shows the data, along with a line. The vertical distances of the data points from the line appear as vertical line segments.
Figure 2.10: FIGURE 2.10 The least-squares idea. For each observation, find the vertical distance of each point from a regression line. The least-squares regression line makes the sum of the squares of these distances as small as possible.