Cengiz Haksever runs an Istanbul high-level jewelry shop.He advertises weekly in local Turkish newspapers and is thinking of increasing his budget.Before doing so, he decides to evaluate the past effectiveness of these ads.10 weeks' data are sampled which are shown below:

Week

Sales

Ad expenditure ($100s)

1

11

5

2

6

3

3

10

7

4

6

2

5

12

8

6

8

4

7

10

5

8

9

4

9

14

10

10

10

8

Q.1. Using a linear regression model, estimate the sales function for the Jewelry shop based on the above data.

Q.2. Interpret the coefficient value of the independent variable of the estimated sales function.

Q.3. What will be your predicted/estimated sale for Ad expenditure of $12 (in100s)?

Q.4. Find the standard error of estimate.

Q.5. Find the prediction interval at 95% for Ad expenditure of $12 (in100s).

Q.6. Interpret your prediction interval of Q.5 findings.

Q.7. Conduct the hypothesis test at k=0.5:

(a) set the null and alternative hypothesis

(b) calculate standard deviation to calculate t-statistic

(c) Calculate t-statistic

(d) Find the critical value at k=.05 using the t-distribution table

(e) State the decision rule and apply your critical value to test the hypothesis

(f) Draw conclusion of your hypothesis test.

Q.8. Calculate the correlation coefficient.

Q.9. Find the value of coefficient of determination (r2).

Q.10. Interpret the coefficient of determination.