Answer to Question #203761 in Statistics and Probability for ejaz

Question

Mr. Ali runs a gift shop in the Defense area, Karachi. He advertises weekly in the local newspapers and is considering increasing his advertising budget. Before doing so, he decides to evaluate the past effectiveness of these advertisements. Five weeks are sampled, and the advertising expenses (in PKR) and sales volume for each is shown in the Table 2. Develop a regression equation that would help Mr. Ali evaluate his advertising. FInd constant of this regression equaiton.

 

S.No.

Sales (PKR 100)

Advertising (PKR 100)

1.00

6.00

4.10

2.00

8.00

6.72

3.00

6.00

5.05

4.00

10.00

7.26

5.00

6.00

2.69

Answer 1

The linear regression equation is of form

$y=β_0+β_1x$

Import the data in the excel and then click on the "DATA" tab then on the "Data Analysis". A dialog box

The Regression Table is

The coefficients are

$β_0=-1.3025 \\ β_1=0.898125$

Therefore, the regression equation is

$y=-1.3025+0.898125x$