a. Let x equal advertising expenditures and y equal revenue. Use the method of least squares to develop a straight line approximation of the relationship between the two variables. b. Test whether revenue and advertising expenditures are related at a .05 level of significance. c. Prepare a residual plot of y-ŷ versus ŷ. Use the result from part (a) to obtain the values of ŷ. d. What conclusions can you draw from residual analysis? Should this model be used, or should we look for a better one?
a. Let x equal advertising expenditures and y equal revenue. Use the method of least squares to develop a straight line approximation of the relationship between the two variables. b. Test whether revenue and advertising expenditures are related at a .05 level of significance. c. Prepare a residual plot of y-ŷ versus ŷ. Use the result from part (a) to obtain the values of ŷ. d. What conclusions can you draw from residual analysis? Should this model be used, or should we look for a better one?
Big Ideas Math A Bridge To Success Algebra 1: Student Edition 2015
1st Edition
ISBN:9781680331141
Author:HOUGHTON MIFFLIN HARCOURT
Publisher:HOUGHTON MIFFLIN HARCOURT
Chapter4: Writing Linear Equations
Section4.5: Analyzing Lines Of Fit
Problem 7E
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Transcribed Image Text:Data on advertising expenditures and revenue
(in thousands of dollars) for the Four Seasons
Restaurant follow.
Advertising Expenditures Revenue
1
19
2
32
4
44
40
10
52
14
53
20
54
Transcribed Image Text:a. Let x equal advertising expenditures
and y equal revenue. Use the method of
least squares to develop a straight line
approximation of the relationship
between the two variables.
b. Test whether revenue and advertising
expenditures are related at a .05 level of
significance.
c. Prepare a residual plot of y- ŷ versus
ý. Use the result from part (a) to obtain
the values of ŷ.
d. What conclusions can you draw from
residual analysis? Should this model be
used, or should we look for a better one?
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