Calculate and plot the regression residuals

Reference no: EM131415969

Analysis of television market share. The data in the table are the monthly market shares for a product over most of the past year. The least squares line relating market share to television advertising expenditure is found to be

y^ = -1.56 + 6.87x

866_Tab 3.jpg

(a) Calculate and plot the regression residuals in the manner outlined in this section.

(b) The response variable y, market share, is recorded as a percentage. What does this lead you to believe about the least squares assumption of homoscedasticity? Does the residual plot substantiate this belief?

(c) What variance-stabilizing transformation is suggested by the trend in the residual plot? Refit the first-order model using the transformed responses. Calculate and plot these new regression residuals. Is there evidence that the transformation has been successful in stabilizing the variance of the error term, ε?

Reference no: EM131415969

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