Berrian, sales manager of Allmond Arenas, is checking to see if there is any relationship between promotional costs and ticket revenues at the sports stadium. She obtains the following data for the past 9 months:

Month	Ticket Revenues	Promotional Costs
April	$250,000	$56,000
May	320,000	69,000
June	370,000	84,000
July	530,000	94,000
August	480,000	104,000
September	500,000	114,000
October	590,000	124,000
November	720,000	184,000
December	815,500	201,000

She estimates the following regression equation:

Ticket revenues = $43,814 + ($2.80 × Promotional costs)

1.	Draw the regression line and evaluate it using the criteria of economic plausibility, the goodness of fit, and the slope of the regression line.
2.	Use the high-low method to compute the function relating to promotional costs and revenues.
3.	Using (a) the regression equation and (b) the high-low equation, what is the increase in revenues for each $10,000 spent on promotional within the relevant range? Which method should Kathy use to predict the effect of promotional costs on revenues? Explain briefly.

Answer rating: 100% (QA)

a The regression lion equotion is given by N 02748x19... View the full answer