correlation and regression

was just wondering if anyone could explain me answer of practice problem 16, reading 11, page 317 of curriculum…

i didnt get why deleting observations with small residuals will result in an increase in standard error and decrease in R-squared.

standard error is similar to avg. deviation from the mean. remove the observations with small residuals and the avg deviation will increase.

r-squared represents explained variation in the dependent variable. even if you remove observations with small residuals, the explained variation as a percentage of total variation will decrease.

thank you cinderella… its making sense now