Sales and Marketing Management determined the

"effective buying income" (EBI) of the average household in a state. Can the EBI be used to predict retail sales per household in the store-group category "eating and drinking places"?

a. Use the data for 13 states given in the table on page 488 to find the least squares line relating retail sales per household ('y) to average household EBI (x).

b. Plot the least squares line, as well as the actual data points, on a scattergram.

c. Based on the graph, part

b, give your opinion regarding the predictive ability of the least squares line.

The downsizing and restructuring that took place in corporate America during the 1990s encouraged both laid off middle managers and recent graduates of business schools to become entrepreneurs and start their own businesses. Assuming a business start-up does well, how fast will it grow? Can it expect to need 10 employees in three years or 50 or 100? To answer these questions, a random sample of 12 firms were drawn from the Znc. Magazine's

"1996 Ranking of the Fastest-Growing Private Companies in America."The age (in years since 1995), x, and number of employees (in 1995), y, of each firm are recorded in the table at left. SAS was used to conduct a simple linear regression analysis for the model, E(y) = Po + Pix. The printout is shown below.

a. Plot the data in a scattergram. Does the number of employees at a fast-growing firm appear to increase linearly as the firm's age increases?

b. Find the estimates of Po and PI in the SAS printout.
Interpret their values.