Exercise for the Final (not graded)

Ten sales regions of equal sales potential for a company were randomly selected. The advertising expenditures (in units of $10,000) in these 10 sales regions were purposely set during July of last year at, respectively, 5, 6, 7, 8, 9, 10, 11, 12, 13 and 14. The sales volumes (in units of $10,000) were then recorded for the 10 sales regions and found to be, respectively, 113, 116, 106, 105, 129, 114, 110, 110, 104, and 103. Assuming that the simple linear regression model is appropriate, it can be shown that b0 = 119.8667, b1 = -.9333.

a)Is the slope significant? Conduct a formal critical value test, and a formal P-value test.

b)Is the F test significant?

c)Can you predict Y when X is 1? If yes, what is your prediction?

d)Can you predict Y when X is 11? If yes, what is your prediction?