The owner of a retail store randomly selected the following weekly data on profits and advertising cost.
Week Advertising Cost ($) Profit ($)
1 0 200
2 50 270
3 250 420
4 150 300
5 125 325
1. Compute the least squares estimated line and predict profits for an advertising cost of $200.
3. Using a 0.05 level of significance, determine if there is a significant relationship between weekly advertising cost and profits. Conduct both a t test and an F test (perform all six steps of hypothesis testing and show the ANOVA table).
This solution is comprised of a detailed explanation of various aspects of Regression Analysis and Hypothesis Test as it pertains to the given problem. Supplemented with Interactive EXCEL sheet, this step-by-step explanation of this complicated topic provides students with a clear perspective of Regression Analysis.