Question

1) Consider the following sample data for the relationship between advertising budget and sales for Product A:

Observation	1	2	3	4	5	6	7	8	9	10
Advertising ($)	40,000	50,000	50,000	60,000	70,000	70,000	80,000	80,000	90,000	100,000
Sales ($)	240,000	308,000	315,000	358,000	425,000	440,000	499,000	494,000	536,000	604,000

What is the predicted sales quantity for an advertising budget of $68,000?

Please round your answer to the nearest integer.

Note that the correct answer will be evaluated based on the full-precision result you would obtain using Excel.

2) Consider the following sample data for the relationship between advertising budget and sales for Product A:

Observation	1	2	3	4	5	6	7	8	9	10
Advertising ($)	50,000	60,000	60,000	70,000	70,000	80,000	90,000	90,000	100,000	110,000
Sales ($)	299,001	371,000	364,000	430,000	440,000	485,000	535,000	546,000	595,000	675,000

What is the correlation value for the relationship between advertising and sales?

Please round your answer to the nearest hundredth.

Note that the correct answer will be evaluated based on the full-precision result you would obtain using Excel.

Answer 1

1) What is the predicted sales quantity for an advertising budget of $68,000?

We know regression equation is,

Y = a + b*X.

Here, X : Independent variable = Advertising and Y : Dependent variable = Sales

By using Excel data analysis tool, we calculate regression.

Output:

SUMMARY OUTPUT
Regression Statistics
Multiple R	0.9971322
R Square	0.9942727
Adjusted R Square	0.9935567
Standard Error	9239.0163
Observations	10
ANOVA
	df	SS	MS	F	Significance F
Regression	1	1.185E+11	1.185E+11	1388.8101	2.94894E-10
Residual	8	682875380	85359422
Total	9	1.192E+11
	Coefficients	Standard Error	t Stat	P-value	Lower 95%	Upper 95%
Intercept	7711.25	11491.76	0.67	0.52	-18788.81	34211.30
Advertising ($)	6.00	0.16	37.27	0.00	5.63	6.37

Therefore, Regression equation is,

Sales = 7711.25 + 6.00 * Advertising.

Then,

Sales = 7711.25 + 6.00 *.68000

= 415897

The predicted sales quantity for an advertising budget of $68,000 is $415,897.

2) What is the correlation value for the relationship between advertising and sales?

By using Excel data analysis tool, we calculate correlation.

Output:

	Advertising ($)	Sales ($)
Advertising ($)	1
Sales ($)	0.997	1

The correlation value for the relationship between advertising and sales is 0.997