The owner of a retail store randomly selected the following weekly data on profits and advertising cost.
Week
Advertising Cost ($)
Profit ($)
1
0
200
2
50
270
3
250
420
4
150
300
5
125
325
?
a.Write down the appropriate linear relationship between advertising cost and profits. Which variable is the dependent variable? Which variable is the independent variable?b.Develop the least squares estimated regression equation.c.Predict the profits for a week when $200 is spent on advertising.d.Using a t test at the 5% level of significance, test to determine if the relationship between advertising costs and profits is statistically significant.e.Calculate the coefficient of determination.
What will be an ideal response?
| a. | E(y) = ?0 + ?1x, where y is profit and x is advertising cost |
| b. |  = 210.0676 + .80811x |
| c. | $371.69 |
| d. | t = 6.50 > critical t = 3.182; reject H0; relationship is significant |
| e. | .9336 |
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