Instruction 12 -Referring to Instruction 12

question 102

Essay

Instruction 12.40
The management of a chain electronic store would like to develop a model for predicting the weekly sales (in thousands of dollars) for individual stores based on the number of customers who made purchases. A random sample of 12 stores yields the following results:
$$\begin{array} { | l | c | } \hline \text { Customers } & \text { Sales (Thousands of Dollars) } \\\hline 907 & 11.20 \\\hline 926 & 11.05 \\\hline 713 & 8.21 \\\hline 741 & 9.21 \\\hline 780 & 9.42 \\\hline 898 & 10.08 \\\hline 510 & 6.73 \\\hline 529 & 7.02 \\\hline 460 & 6.12 \\\hline 872 & 9.52 \\\hline 650 & 7.53 \\\hline 603 & 7.25 \\\hline\end{array}$$
-Referring to Instruction 12.40,generate the residual plot.

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Definitions:

Rational Expectations

An economic theory assuming individuals and firms use all available information to make forecasts and decisions, leading to outcomes that align with those expectations.

Expectations Theory

A theory in finance which suggests that the yields on long-term bonds will equal the average of short-term interest rates expected in the future, adjusted for a risk premium.

Rational Expectations

The theory suggesting that individuals form forecasts about the future based on all available information.

Critics

Individuals or groups that express disagreement or disapproval towards certain ideas, policies, or works, often seeking to present alternative viewpoints.