More interpretations A household appliance manufac-turer wants to analyze the relationship between total sales and the company’s three primary means of advertising(television, magazines, and radio). All values were inmillions of dollars. They found the regression equationSales = 250 + 6.75 TV + 3.5 Radio + 2.3 Magazines.One of the interpretations below is correct. Which is it?Explain what’s wrong with the others.a) If they did no advertising, their income would be$250 million.b) Every million dollars spent on radio makes salesincrease $3.5 million, all other things being equal.c) Every million dollars spent on magazines increasesTV spending $2.3 million.d) Sales increase on average about $6.75 million for eachmillion spent on TV, after allowing for the effects ofthe other kinds of advertising.
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.
turer wants to analyze the relationship between total sales
(television, magazines, and radio). All values were in
millions of dollars. They found the regression equation
Sales = 250 + 6.75 TV + 3.5 Radio + 2.3 Magazines.
One of the interpretations below is correct. Which is it?
Explain what’s wrong with the others.
a) If they did no advertising, their income would be
$250 million.
b) Every million dollars spent on radio makes sales
increase $3.5 million, all other things being equal.
c) Every million dollars spent on magazines increases
TV spending $2.3 million.d) Sales increase on average about $6.75 million for each
million spent on TV, after allowing for the effects of
the other kinds of advertising.
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