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Linear Regression Analysis of Ads Spend

The document outlines a simple linear regression analysis to estimate the relationship between Advertising Spend and Sales Revenue. It includes steps to find the regression equation, compute standard errors, test hypotheses, calculate R², and make predictions based on given data. The provided data includes monthly advertising spend and corresponding sales revenue figures for analysis.

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Nasradin Abdosh
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9 views1 page

Linear Regression Analysis of Ads Spend

The document outlines a simple linear regression analysis to estimate the relationship between Advertising Spend and Sales Revenue. It includes steps to find the regression equation, compute standard errors, test hypotheses, calculate R², and make predictions based on given data. The provided data includes monthly advertising spend and corresponding sales revenue figures for analysis.

Uploaded by

Nasradin Abdosh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Solution

7Using simple linear regression, estimate the relationship between Advertising Spend (X) and
Sales Revenue (Y).

1. Find the regression equation:

2. Conduct the following statistical tests:

A. Compute the standard error of β0 and β1.

B. Test the null hypothesis Hó: β1 = 0 at a 5% significant level.

C. Calculate R² and interpret the goodness of fit.

3.Predictions: Predict the sales revenue if Advertising Spend = $ 8,000

Month AdsSpend (x) Sales


Revenue (x) XY X² Y²

1 2500 25,000 62500000 6250000 625,000,000

2 3000 30,000 90000000 9000000 900,000,000

3 4000 38,000 152000000 16000000 1,444,000,000

4 4500 42,000 189000000 20250000 1764000000

5 5000 45,000 225000000 25000000 2025000000

6 5500 50,000 275000000 30250000 2500000000

7 6000 53,000 318000000 36000000 2809000000

8 6500 57,000 370500000 42250000 3249000000

9 7000 60,000 420000000 49000000 3600000000

10 7500 65,000 487500000 56250000 4225000000

51500 465000 2589500000 290250000 23141000000

Given Data:-

∑ 𝑋 = 51500 ∑XiYi = 2589500000 X̄ =∑ 𝑋/n = 51500÷10= 5150

∑ 𝑋² = 290250000 ∑Y = 465000 Ȳ=∑y/n = 465000 ÷ 10 = 46500 n= 10

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