A random sample of 30 companies on the Forbes 500 list was selected and the relationship between sales (in hundreds of thousands of dollars) and profits (in hundreds of thousands of dollars) was investigated using regression. A least-squares regression line was fitted to the data using statistical software, with sales as the explanatory variable and profits as the response variable. Assume the conditions for inference are met. Here is the output from the software: Dependent variable is Profits R-squared = 66.2% S = 466.2 with 30 - 2 = 28 degrees of freedom Variable Constant Coefficient -176.644 0.092498 s.e. of Coefficient 61.16 0.0106 P-value 0.0050 S0.0001 Sales Which of the following is an appropriate interpretation of the number 0.092498? For each increase of $100,000 in sales, the predicted profit increases by $9,249.80 O For each increase of $100,000 in profits, the predicted sales increases by $9,249.80 Sales of $100,000 correspond to predicted average profits of $9,249.80 The actual profit typically varies by about $9249.80 from the profit predicted with the least squares regression line using x = sales O The actual sales typically varies by about $9249.80 from the sales predicted with the least squares regression line using x = profit.
Correlation
Correlation defines a relationship between two independent variables. It tells the degree to which variables move in relation to each other. When two sets of data are related to each other, there is a correlation between them.
Linear Correlation
A correlation is used to determine the relationships between numerical and categorical variables. In other words, it is an indicator of how things are connected to one another. The correlation analysis is the study of how variables are related.
Regression Analysis
Regression analysis is a statistical method in which it estimates the relationship between a dependent variable and one or more independent variable. In simple terms dependent variable is called as outcome variable and independent variable is called as predictors. Regression analysis is one of the methods to find the trends in data. The independent variable used in Regression analysis is named Predictor variable. It offers data of an associated dependent variable regarding a particular outcome.
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