The following data represent a company's yearly sales volume andits advertising expenditure over a period of 8 years.
(Y) (X)
Sales inmillions Advertising in ($10,000)
15 32
16 33
18 35
17 34
16 36
(a) Develop a scatter diagram of sales versus advertising andexplain what it shows regarding the relationship between sales andadvertising.
(b) Use the method of least squares to compute an estimatedregression line between sales and advertising by computing b0 andb1.
(c) If the company's advertising expenditure is $400,000, whatare the predicted sales? Give the answer in dollars.
(d) What does the slope of the estimated regression lineindicate?
(e) Compute the coefficient of determination for the estimatedregression equation you got in the previous in-class problem.
(f) Interpret the meaning of the value of the coefficient ofdetermination that you found in d. Be very specific.
(g) Perform a t test and determine whether or not X and Y arerelated. Let it = 0.05.
(h) Perform an F test and determine whether or not X and Y arerelated. Let it = 0.05.
