Question

The director of marketing at a large company wants to determine if the amount of money spent on internet marketing is a good predictor of company profit. She fits a least-squares regression line to 20 months of data and computes the following regression line: Profit = 372.6 + 17.2(advertising dollars) What is the value of the residual for advertising dollars spent equal to $1,020 and Profit equal to $17,500? Round to the nearest integer.

Answer 1

Answer: The value of the residual for advertising dollars spent equal to $1,020 and Profit equal to $17,500 is $417

Profit=372.6+17.2 (advertising dollars)
Advertising dollars=$1,020
Predicted Profit=372.6+17.2 (1,020)→
Predicted Profit=372.6+17,544→
Predicted Profit=$17,916.6

Residual=Predicted Profit-Profit→
Residual=$17,916.6-$17,500→
Residual=$416.6
Rounded to the nearest integer:
Residual=$417

Answer: The value of the residual for advertising dollars spent equal to $1,020 and Profit equal to $17,500 is $417