posted by tar on .
a sales manager used linear regression to find the positive linear relationship between advertising expenditures and sales. The amount of advertising expenditures used to generate the regression equation ranged from $8,000 to $45,000.
The sales manager wants to use the equation to predict the amount of sales that can be expected from advertising expenditures of $55,000 and $65,000.
Which would be more reliable, the sales predicted from the $55,000 advertising expenditure or from the $65,000 expenditure? Explain why!
I would have more confidence in the sales at the $55,000 expenditure level. Think it through, then take a shot.