Multiple Choice
A small business tracks how advertising spending relates to weekly sales.
Plot Advertising Spending (x) vs Sales (y) & find the regression line & correlation coefficient.
12. Regression
Prediction Intervals - Excel
Multiple Choice
A small business tracks how advertising spending relates to weekly sales.
Are the actual sales numbers for weeks with \$400 ad-spending within the interval?
A
Yes
B
No
C
More info is required
Verified step by step guidance1
Step 1: Understand the problem context. We have data on weekly advertising spending and corresponding sales. The question asks if the actual sales for weeks with \$400 advertising spending fall within a certain prediction interval.
Step 2: Identify the weeks with \$400 advertising spending from the table. From the data, week 13 has advertising spending of \$400 with sales of 10200.
Step 3: To determine if the actual sales fall within the interval, we need to calculate the prediction interval for sales when advertising spending is \$400. This involves fitting a linear regression model with advertising as the independent variable and sales as the dependent variable.
Step 4: Using the regression model, calculate the predicted sales for \$400 advertising spending. Then, compute the prediction interval around this predicted value, which accounts for both the uncertainty in the regression estimate and the variability of individual sales values.
Step 5: Compare the actual sales value (10200) for week 13 to the calculated prediction interval. If 10200 lies within the interval, the answer is 'Yes'; otherwise, 'No'.
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