Some members of management of the Fairface Cosmetics Firm believe that demand for its products is related to the promotional activities of local department stores where the cosmetics are sold. However, others in management believe that other factors, such as local demographics, are stronger determinants of demand behavior. The following data for local annual promotional expenditures for Fairface products and local annual unit sales for Fairface lip gloss have been collected from 20 stores selected at random from different localities:

Based on these data, does it appear that the strength of the relationship between sales and promotional expenditures is sufficient to warrant using a linear regression forecasting model? Explain yourresponse.

Transcribed Image Text:

Annual Unit Sales (1,000s) 3.5 7.2 Annual Promotional Expenditures ($1,000s) Store $12.6 15.5 10.8 20.3 21.9 25.6 14.3 15.1 18.7 9.6 12.7 16.3 8.9 5.7 10.2 7.3 2.5 4.6 10 12 13 14 15 16 17 18 19 20 3.0 4.8 10.2 5.1 11.3 10.4 12.4 17.3 11.2 18.5 16.7