Math Problem Statement

An advertising firm wishes to demonstrate to its clients the effectiveness of the advertising campaigns it has conducted. The following bivariate data on twelve recent campaigns, including the cost of each campaign (denoted by , in millions of dollars) and the resulting percentage increase in sales (denoted by ) following the campaign, were presented by the firm. A scatter plot of the data is shown in Figure 1. Campaign cost, x (in millions of dollars) Increase in sales, y (percent) 3.23 6.54 3.47 6.83 2.84 6.88 1.53 6.59 2.50 6.60 1.95 6.71 1.44 6.37 3.80 6.78 1.98 6.58 3.79 6.96 1.52 6.18 2.94 6.68 Increase in sales (percent) y66.26.46.66.877.2x11.522.533.54 Campaign cost (in millions of dollars) Figure 1 The least-squares regression line for these data has a slope of approximately . Answer the following. Carry your intermediate computations to at least four decimal places, and round your answers as specified below. (If necessary, consult a list of formulas.) (a) What is the value of the y-intercept of the least-squares regression line for these data? Round your answer to at least two decimal places.

(b) What is the value of the sample correlation coefficient for these data? Round your answer to at least three decimal places.

Solution

To solve the problem, we need to calculate the following:

  1. The y-intercept of the least-squares regression line (denoted as b0b_0).
  2. The sample correlation coefficient (denoted as rr).

Given:

  • The slope b1b_1 is provided by the problem.
  • The data points are given for campaign costs xx and the corresponding increase in sales yy.

Step 1: Find the mean values of xx and yy.

Let's calculate the means xˉ\bar{x} and yˉ\bar{y} first.

xˉ=1ni=1nxi\bar{x} = \frac{1}{n} \sum_{i=1}^{n} x_i

yˉ=1ni=1nyi\bar{y} = \frac{1}{n} \sum_{i=1}^{n} y_i

where nn is the number of data points.

Step 2: Calculate the y-intercept b0b_0.

The y-intercept b0b_0 is calculated using the formula:

b0=yˉb1xˉb_0 = \bar{y} - b_1 \cdot \bar{x}

Step 3: Calculate the sample correlation coefficient rr.

The sample correlation coefficient rr is calculated using:

r=i=1n(xixˉ)(yiyˉ)i=1n(xixˉ)2i=1n(yiyˉ)2r = \frac{\sum_{i=1}^{n} (x_i - \bar{x})(y_i - \bar{y})}{\sqrt{\sum_{i=1}^{n} (x_i - \bar{x})^2 \cdot \sum_{i=1}^{n} (y_i - \bar{y})^2}}

Let me calculate these values step by step.### Results: (a) The value of the y-intercept b0b_0 of the least-squares regression line is approximately 6.26 (rounded to two decimal places).

(b) The value of the sample correlation coefficient rr for these data is approximately 0.743 (rounded to three decimal places).

Would you like further details on the computations or have any other questions? Here are five related questions you might be interested in:

  1. How is the slope of the regression line determined?
  2. What does the correlation coefficient tell us about the relationship between campaign cost and sales increase?
  3. How would the regression line change if one data point was removed?
  4. How do you interpret the y-intercept in this context?
  5. What are the assumptions underlying linear regression?

Tip: A strong correlation coefficient near 1 or -1 indicates a strong linear relationship, while a coefficient near 0 suggests a weak or no linear relationship.

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Math Problem Analysis

Mathematical Concepts

Statistics
Linear Regression
Correlation Coefficient

Formulas

Least-squares regression line formula
Sample correlation coefficient formula

Theorems

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Suitable Grade Level

Higher Education