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    Correlation and Regression Analysis

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    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.

    2. Develop a scatter diagram and compute both the correlation coefficient and the coefficient of determination.

    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).

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    Solution Summary

    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.