HA1011 Tutorial Questions On Applied Quantitative Methods - Assessment 1

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Week 3 Question (10 marks)

In seeking to determine how influential advertising is, the management of a recently established retail chain collected data on sales revenue and advertising expenditure from its’ stores over the last ten (10) weeks. The table below shows the data collected:

Advertising
Expenditure ($ 000)
3 5 7 6 3.5 4 4.5 7 7.5 8.5
Sales ($ 000) 50 250 700 450 75 150 200 750 800 1100
  1. If they are going to run a linear regression, identify which variable should be the independent variable and which should be the dependent variable in a regression equation. (2 marks)
  2. Estimate the slope and intercept coefficients of the linear regression model. (6 marks)
  3. If advertising expenditure is equal to $9,000, estimate the total sales income. (2 marks)

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