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Exercise 2An organisation is using linear regression analysis to establish an equation that shows a relationship between advertising expenditure and sales. It will then use the equation to predict sales for given levels of advertising expenditure. Data for the last five periods are as follows:What are the value of ‘∑x’ , ‘∑y’ and ‘ n’ that need to be inserted into the appropriate formula?
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The following statements have been made about linear regression analysisI It provides more accurate estimates than the high low techniquei It can only be used to estimate variable costii It assumes that cost behaviour is lineariv It only takes into account two observations of cost and outputWhich of the following statements about the use of linear regression analysis in cost estimation are true?
Which of the following correlation coefficients indicates the weakest relationship between two variables?
Which of the following is NOT a feasible value for the correlation coefficient?
Using data from 20 big cities in China, it has been calculated that the correlation between the level of car ownership and the number of road death is 0.80. Which of the statements shown follow from this?i. There is a strong relationship between the level of car ownership and the number of road deathsii. High levels of car ownership cause high levels of road deathsiii. 80% of the variation in the level of road deaths from one city to the next can be explained by the corresponding variation in the level of car ownershipiv. 64% of the variation in the level of road deaths from one city to the next can be explained by the corresponding variation in the level of car ownership
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