The following data represent a company’s yearly sales volume and its advertising expenditure over a period of 5 years. (Y) (X) Sales in Millions Advertising Of Dollars in ($10,000) 15 32 16 33 18 35 17 34 16 36 Develop a scatter diagram of sales versus advertising and explain what it shows regarding the relationship between sales and advertising. Use the method of least squares to compute an estimated regression line between sales and advertising by computing b0 and b1 If the company’s advertising expenditures is $400,000, what are the predicted sales? Give the answer in dollars. What does the slope of the estimated regression line indicate?
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.
The following data represent a company’s yearly sales volume and its advertising expenditure over a period of 5 years.
(Y) (X)
Sales in Millions Advertising
Of Dollars in ($10,000)
15 32
16 33
18 35
17 34
16 36
- Develop a
scatter diagram of sales versus advertising and explain what it shows regarding the relationship between sales and advertising. - Use the method of least squares to compute an estimated regression line between sales and advertising by computing b0 and b1
- If the company’s advertising expenditures is $400,000, what are the predicted sales? Give the answer in dollars.
- What does the slope of the estimated regression line indicate?
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