To be able to explain linear models well, I would like to start with an example where the solution can be found using a system of linear equations—a technique we all learned in school when we were around 12 years old. We will then see why this technique doesn't always work with real-life problems, and so a linear regression model is needed. Then, we will apply the regression model to a real-life regression problem and learn how to improve our solution along the way.
Linear equations
In this example, we have five passengers who have taken a taxi trip. Here, we have a record of the distance each taxi covered in kilometers and the fair displayed on its meter at the end of each trip:
We know that taxi meters usually start with a certain amount and then they...
