A Local Tire Dealer Wants to Predict the Number of Tires

question 73

Multiple Choice

A local tire dealer wants to predict the number of tires sold each month.He believes that the number of tires sold is a linear function of the amount of money invested in advertising.He randomly selects 6 months of data consisting of monthly tire sales (in thousands of tires) and monthly advertising expenditures (in thousands of dollars) .The simple linear regression equation is = 3 + 1X and sample correlation coefficient (r²) = .6364.Test to determine if there is a significant correlation between the monthly tire sales and monthly advertising expenditures.Use H₀: $\rho$ = 0 vs.H_A: $\rho$ $\neq$ 0 at $\alpha$ = .05.

• A)Reject the null hypothesis
• B)Fail to reject the null hypothesis

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Definitions:

Renovation Expense

Costs incurred in updating or restoring the physical condition of a business asset to increase its value or extend its life.

Straight-Line Depreciation

A method of calculating the depreciation of an asset which assumes the asset will lose an equal amount of value each year over its useful life.

Operating Expenses

are the costs involved in running a business that are not directly tied to the creation of a product or service, such as rent, utilities, and administrative salaries.

Cash Sales

Transactions where payment for goods or services is made at the time of sale in cash or its equivalent.