Consider the dataset below and respond to the questions that follow:
Advertisement ($'000) Sales ($'000)
1068 4489
1026 5611
767 3290
885 4113
1156 4883
1146 5425
892 4414
938 5506
769 3346
677 3673
1184 6542
1009 5088
· Construct a scatter plot with this data.
· Do you observe a relationship between both variables?
· Use Excel to fit a linear regression line to the data. What is the fitted regression model? (Hint: You can follow the steps outlined on page 497 of the textbook.)
· What is the slope? What does the slope tell us?Is the slope significant?
· What is the intercept? Is it meaningful?
· What is the value of the regression coefficient,r? What is the value of the coefficient of determination, r^2? What does r^2 tell us?
· Use the model to predict sales and the business spends $950,000 in advertisement. Does the model underestimate or overestimates ales?