the error terms (e) are represented by vertical red linesįrom the scatter plot above, it can be seen that not all the data points fall exactly on the fitted regression line.the intercept (b0) and the slope (b1) are shown in green.the best-fit regression line is in blue.The figure below illustrates the linear regression model, where: e is the error term (also known as the residual errors), the part of y that can be explained by the regression model.b1 is the slope of the regression line.b0 is the intercept of the regression line that is the predicted value when x = 0.b0 and b1 are known as the regression beta coefficients or parameters:.The mathematical formula of the linear regression can be written as y = b0 + b1*x + e, where:
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