Exercise 16.2

Xr16-02 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 25 31 36 88 90 99

Sales 9.6 11.3 12.8 9.8 8.9 12.5 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. Calculate the least squares line and interpret the coefficients.

Exercise 16.24

Refer to Exercise 16.2. a. b. (above)

Determine the standard error of estimate.

Is there evidence of a linear relationship between advertising and sales?

c. Estimate 1 with 95% confidence.

d. Compute the coefficient of determination and interpret this value.

e. Briefly summarize what you have learned in parts (a) through (d).