STAT170 Workshop Notes prepared by Nan Carter for Numeracy ...

Question 2.
The following table gives a sample of advertising
expenditures and associated sales volumes for a
company during 10 randomly selected months. We are
interested in being able to predict gross monthly
sales volume from the amount spent on advertising.
(from J. Gosling, Introductory Statistics)
Month 1 2 3 4 5 6 7 8 9 10
Advertising
expenses
(x $10 000)
1.2 0.8 1.0 1.3 0.7 0.8 1.0 0.6 0.9 1.1
Sales Volume 101
(x $10 000)
92 110 120 90 82 93 75 91 105
a) Draw, and comment on, a scatter plot of the data.
b) State the slope of the regression line
c) State the intercept of the regression line.
d) State the equation of the regression line.
e) Draw the line on your scatter plot.
f) Interpret the regression equation; would it be
useful for prediction?
g) Check the assumptions of the model.
Scatterplot of sales against advertising expenses
1.4
1.3
1.2
1.1
1.0
0.9
0.8
0.7
0.6
0.5
Advertising expenses (x $10000)
70 80 90 100 110 120 130
30
Sales Volume (x $10 000)
Nan Carter: workshop notes prepared for Numeracy Centre Macquarie University.