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Question - More sales and profits. Consider again the relationship between the sales and profits of Fortune 500 companies that you analyzed in Exercise.
a) Find a 95% confidence interval for the slope of the regression line. Interpret your interval in context.
b) Last year the drug manufacturer Eli Lilly, Inc., reported gross sales of $9 billion (that s $9,000 million). Create a 95% prediction interval for the company s profits, and interpret your interval in context.
Exercise - Sales and profits. A business analyst was interested in the relationship between a company s sales and its profits. She collected data (in millions of dollars) from a random sample of Fortune 500 companies and created the regression analysis and summary statistics shown. The assumptions for regression inference appeared to be satisfied.
a) Is there a significant association between sales and profits? Test an appropriate hypothesis and state your conclusion in context.
b) Do you think that a company's sales serve as a useful predictor of its profits? Use the values of both R2 and s in your explanation.
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