Reference no: EM13579398

"In a recent survey concerning company sales and net earnings, 11 companies responded. Data analysis was computed, letting sales ($ thousands) be the independent variable, and net earnings ($ thousands) be the dependent variable. ? The results are as follows: Regression AnalysisObservations n=11Intercept -1.34Sales coefficient 0.08 Coefficient of Correlation r=0.604 Value of t statistic t=2.397 Using this information, answer the following questions.

a) Use the regression line above to estimate the net earnings for a company with sales of $33.2 thousand.?For full marks, estimate your answer to the nearest dollar. Earnings = $?

b) Given the regression equation provided above, which of the following statements is most appropriate regarding company sales and earnings?

1. Positive sales means positive net earnings for any business.

2. Sales have no effect on net revenues.

3. Insufficient sales can lead to net losses for some businesses.

4. After a certain level of sales has been reached, net earnings stop growing entirely.

c) Based on the coefficient of correlation, which of the following statements is most appropriate regarding the strength of the association between company sales and earnings? The intervals for strong positive, moderate positive, weak positive, weak negative, moderate negative, and strong negative correlation all have the same length on the interval [-1,1].

1. There is a strong positive relationship between sales and net earnings.

2. There is a moderate positive relationship between sales and net earnings.

3. There is a weak positive relationship between sales and net earnings.

4.There is a weak negative relationship between sales and net earnings.

5.There is a moderate negative relationship between sales and net earnings.

6.There is a strong negative relationship between sales and net earnings.