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In: Statistics and Probability

The PerottiPharma Company is investigating the relationship between advertising expenditures and the sales of some over-the-counter...

The PerottiPharma Company is investigating the relationship between advertising expenditures and the sales of some over-the-counter (OTC) drugs. The following data represents a sample of 10 common OTC drugs. Note that AD = Advertising dollars in millions and S = Sales in millions $.

AD S
22 64
25 74
29 82
35 90
38 98
42 118
46 125
52 130
65 158
88 230
  1. What is the equation of the regression line?
  2. State the hypotheses to test for the significance of the regression equation.
  3. Is there a significant relationship between dependent and independent variables at alpha=0.05? Why or why not?
  4. Interpret the slope of the regression line in the context of the problem.
  5. Find the coefficient of determination and interpret its meaning in the context of the problem.
  6. Create a 95% prediction interval for Sales if Advertising dollars = $50 million and interpret its meaning.

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