12. College Textbooks A publisher of college textbooks conducted a study relating profit per text y to cost of sales x over a 6-year period when its sales force (and sales costs) were growing rapidly. These inflation-

adjusted data (in thousands of dollars) were collected:

Expecting profit per book to rise and then plateau, the publisher fitted the model E(y) x x 0 1 2 2 5b 1b 1b to the data.

a. Plot the data points. Does it look as though the quadratic model is necessary?

b. Find s on the printout. Confirm that

c. Do the data provide sufficient evidence to indicate that the model contributes information for the prediction of y? What is the p-value for this test, and what does it mean?

d. What sign would you expect the actual value of b2 to have? Find the value of b2 in the printout. Does this value confirm your expectation?

e. Do the data indicate a significant curvature in the relationship between y and x? Test at the 5% level of significance.

f. What conclusions can you draw from the accompanying residual plots?

Transcribed Image Text:

Profit per Text, y 16.5 22.4 24.9 28.8 31.5 35.8 Sales Cost per Text, x 5.0 5.6 6.1 6.8 7.4 8.6