Refer to Example 11.2 and the simple linear regression of the advertising-sales data in Table 11.1.

a. Compute an estimate of σ.

b. Give a practical interpretation of the estimate.

Example 11.2

Refer to the advertising–monthly sales data presented in Table 11.1. Consider the straight-line model, E(y) = β₀ + β₁x, where y = sales revenue (thousands of dollars) and x = advertising expenditure (hundreds of dollars).

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Table 11.1 Advertising-Sales Data Month Advertising Expenditure, x ($100s) 12345 2 12345 Sales Revenue, y ($1,000s) 11224