what do they mean by residual(y value above minus equation y value. when
1. x is 0.5 and y is 1.6
The residual in a regression model is the difference between the observed and the predicted $\displaystyle y$ for some $\displaystyle x$ ($\displaystyle y$ the dependent variable and $\displaystyle x$ the independent variable).
So if we have a model $\displaystyle y=a x + b$, and a data point $\displaystyle (x_i,y_i)$ the residual is for this point is:
$\displaystyle r_i=y_i - (a x_i + b)$
RonL