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# Scatter diagram, regression

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Scatter diagram, regression

Quick-print firms in a large downtown business area spend most of their advertising dollars on advertisements on bus benches. A research project involves predicting monthly sales based on the annual amount spent on placing ads on bus benches. A sample of quick-print firms revealed these advertising expenses and sales.

(\$ thousands) Monthly Sales
(\$ thousands)
2 40
4 55
5 75
7 80
3 45

a. Draw a scatter diagram.
b. Determine the coefficient of correlation.
c. What is the coefficient of determination?
d. Compute the regression equation.
e. Estimate the monthly sales of a quick-print firm that spends \$4,500 on bus bench advertisements.

https://brainmass.com/statistics/regression-analysis/scatter-diagram-regression-estimated-8637

## SOLUTION This solution is FREE courtesy of BrainMass!

a) Shown in the excel sheet

b)Coefficient of correlation = R^2 = .913 ( from the graph).
So R = .955

c)Coefficient of Determination = 8.8514 ( Frm the graph)

d)Regression Equation : Y = 8.8514x + 21.824

e)Monthly Sales(y) = 8.8514 * 4.5 + 21.824
= 61.6553 ( in thousands of dollars)

f) From the above linear regression equation we can see that over 1000 dollars spend on advertising brings in extra 8851 dollars in monthly sales. Without any advertising we would have a monthly sale of 21,824 dollars.

I have done the problem using excel and the inbuilt capabilities of excel to calculate the regression equation. You can do this by first creating a scatter plot on excel and then adding a trendline from the pull down menu. Hope it is clear.

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