Question

9. Quick-print firms in urban centres spend most of their advertising dollars on displays on transit benches. A research project involves predicting monthly sales based on the annual amount spent on placing ads on these benches. A sample of quick-print firms revealed the following information: Company Annual Advertising ($thousands) Monthly Sales ($thousands)

Company     Advertising     Sales

A                    2                       20

B                   4                       45

C                    5                       30

D                    7                       50

E                   3                       20

a) Determine the equation of the line of best fit.

b) Determine the value of y’ for an x of 6.

c) Calculate the coefficient of correlation (r).

d) Describe the relationship between the two variables.

Answer 1

Solution:

a) Determine the equation of the line of best fit.

Answer:

b) Determine the value of y’ for an x of 6.

Answer:

c) Calculate the coefficient of correlation (r).

Answer:

d) Describe the relationship between the two variables.

Answer: The value of the correlation coefficient is 0.8097, which means there exists a strong positive linear relationship between advertising and sales.