Data on advertising expenditures and revenue (in thousands of dollars) for the Four Seasons Restaurant follow. Advertising Expenditures Revenue 1 19 2 33 4 44 6 41 10 53 14 54 20 55 Let x equal advertising expenditures and y equal revenue. Complete the estimated regression equation below (to 2 decimals). = + x Compute the following (to 1 decimal). SSE SST SSR MSR MSE Test whether revenue and advertising expenditures are related at a .05 level of significance. Compute the F test statistic (to 2 decimals). What is the p-value? Use Table 1 of Appendix B. What is your conclusion?
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.
Data on advertising expenditures and revenue (in thousands of dollars) for the Four Seasons Restaurant follow.
| Advertising Expenditures | Revenue | |
| 1 | 19 | |
| 2 | 33 | |
| 4 | 44 | |
| 6 | 41 | |
| 10 | 53 | |
| 14 | 54 | |
| 20 | 55 |
- Let x equal advertising expenditures and y equal revenue. Complete the estimated regression equation below (to 2 decimals).
= + x - Compute the following (to 1 decimal).
SSE SST SSR MSR MSE - Test whether revenue and advertising expenditures are related at a .05 level of significance.
Compute the F test statistic (to 2 decimals).
What is the p-value? Use Table 1 of Appendix B.
What is your conclusion? - Which of the following scatter displays accurately represent the residuals plotted against the independent variable?
Scatter diagram #1
Scatter diagram #2
Scatter diagram #3 - What does the residual plot above suggest about the assumption of linearity between x and y?
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