Understanding Linear Regression

Let's say you're looking to buy a new PC from an online store (and you're most interested in how much RAM it has) and you see on their first page some PCs with 4GB at $100, then some with 16 GB at $1000. So, you estimate in your head that given the prices you saw so far, a PC with 8 GB RAM should be around $400. This will fit your budget and decide to buy one such PC with 8 GB RAM. This kind of estimations can happen almost automatically in your head without knowing it's called linear regression and without explicitly computing a regression equation in your head (in our case: y 75x – 200). So, what is linear regression? Linear regression is just the process of estimating an unknown quantity based on some known ones (this is the regression part) with the condition that the unknown quantity can be obtained from the known ones by using only 2 operations: scalar multiplication and addition (this is the linear part).