The following data represent a company's yearly sales and its advertising expenditure over a period of 8 years.
Sales in Millions of Dollars (y) Advertising Expenditure (in $10,000) (x)
15 32
16 33
18 35
17 34
16 36
19 37
19 39
24 42
a. Develop a scatter diagram of sales versus advertising and explain what it shows regarding the relationship between sales and advertising.
b. Use the method of least squares to compute an estimated regression equation between sales and advertising.
c. If the company's advertising expenditure is $400,000, what are the predicted sales? Give the answer in dollars.
d. What does the slope of the estimated regression line indicate?
e. Compute the coefficient of determination and fully interpret its meaning.
f. Compute the correlation coefficient.
g. Use the F test to determine whether or not the regression model is significant at α = .05.
h. Use the t test to determine whether the slope of the regression model is significant at α = .05.
i. Develop a 95% confidence interval for predicting the average sales for the years when $400,000 was spent on advertising. Give your answer in dollars.