Use a 5% significance level for all tests of hypotheses.
Attempting to analyze the relationship between advertising and sales, the owner of a furniture store recorded the monthly advertising budget ($thousands) and the sales ($millions) for a sample of 12 months. The data are listed here:
Advertising 23 46 60 54 28 33
Sales 9.6 11.3 12.8 9.8 8.9 12.5
Advertising 25 31 36 88 90 99
Sales 12.0 11.4 12.6 13.7 14.4 15.9
a. Draw a scatter diagram. Does it appear that advertising and sales are linearly related?
b. What is least square line formula?
c. Calculate the least squares line and interpret the coefficients.
d. Determine the standard error of estimate.
e. Is there evidence of a linear relationship between advertising and sales?
f. Estimate β1 with 95% confidence.
g. Compute the coefficient of determination and interpret this value.