The following data represent a company\'s yearly sales volume and its advertisin
ID: 3437383 • Letter: T
Question
The following data represent a company's yearly sales volume and its advertising expenditure over a period of 8 years.
(Y) (X)
Sales in Advertising
Millions of Dollars in ($10,000)
15 32
16 33
18 35
17 34
16 36
19 37
19 39
24 42
1. Develop a scatter diagram of sales versus advertising and explain what it shows regarding the relationship between sales and advertising.
2. Use the method of least squares to compute an estimated regression line between sales and advertising.
3. If the company's advertising expenditure is $400,000, what are the predicted sales? Give the answer in dollars.
4. What does the slope of the estimated regression line indicate?
Explanation / Answer
Scatter plot is as follows:
--------------------------------------
Plug in x = 400000
y = 16.714+428400
= 445114
4) Slope of the estimated regression line gives rate of change of y for 1 unit change in x.
For example, here when ad expenditure increases by 1 Unit (10000) then sales increases by 1.071 units.
X Y XY XX 15 32 480 225 16 33 528 256 18 35 630 324 17 34 578 289 16 36 576 256 19 37 703 361 19 39 741 361 24 42 1008 576 144 288 5244 2648 y=16.714+1.071xRelated Questions
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