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Part 2: Simple Linear Regressions – Chapter 14 (2 questions with a total of 11 sub-sections,...

Part 2: Simple Linear Regressions – Chapter 14

(2 questions with a total of 11 sub-sections, 6 points per sub-section, part total 66 points)

2) A local grocery store wants to predict its daily sales in dollars (y). The manager believes that the amount of newspaper advertising (x) significantly affects sales. He randomly selects 7 days of data (n=7) consisting of daily grocery store sales (y, in thousands of dollars) and advertising expenditures (x, in thousands of dollars). The Excel output given below summarizes the results of the regression model. Use the Excel output to answer the questions.

r2 = 0.762

R = 0.873

Std. Error = 11.547

ANOVA

SS

df

MS

F

p-value

Regression

2,133.3333

1

2,133.3333

16.00

0.0103

Residual

666.6667

5

133.3333

Total

2,800.0000

6

Regression output

Confidence interval

Variables

Coefficients

std. error

t-statistic

p-value

95% lower

95% upper

Intercept

63.3333

7.9682

7.948

0.0005

42.8505

83.8162

Advertising

6.6667

1.6667

4.000

0.0103
  1. What is the estimated simple linear regression equation?
  1. At a significance level of .05, test the significance of the slope and state your conclusion.
  1. What is the value of the simple coefficient of determination?
  1. What are the limits of the 95 percent confidence interval for the population slope?
  1. If the manager decides to spend $3,000 on advertising (x=3), based on the simple linear regression results given above, what are the estimated sales?
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