An advertising agent who created a regression model using amount spent on Advertising to predict annual Sales for a company made these two statements. Assuming the calculations were donecorrectly, explain what is wrong with each interpretation.

a) An R2 of93% shows that this linear model is appropriate.

b) If this company spends$1.5 million onadvertising, then annual sales will be$10 million.

1. Choose the correct choice below.

A.

R2 is an indication of the strength of themodel, not the appropriateness of the model. A scatterplot of the residuals is the indicator of an appropriate model.

B.

R2 is an indication of the strength of themodel, not the appropriateness of the model. A regression line is the indicator of an appropriate model.

C.

R2 is an indication of the nonlinearity of themodel, not the appropriateness of the model. A regression line is the indicator of an appropriate model.

D.

R2 is an indication of the nonlinearity of themodel, not the appropriateness of the model. A scatterplot of the residuals is the indicator of an appropriate model.

1. Choose the correct choice below.

A.

Regression models givepredictions, not actual values. The agent should havesaid, "The model predicts that annual sales will be$10 million when$1.5 million is spent onadvertising."

B.

Regression models giveprobabilities, not actual values. The agent should havesaid, "Advertising spending of$1.5 million will probably result in$10 million in annualsales."

C.

Regression models give actualvalues, but the agent should havesaid, "The model states that advertising spending of$1.5 million will result in$10 million in annualsales."

D.

Regression models giveaverages, not actual values. The agent should havesaid, "Advertising spending of$1.5 millionwill, onaverage, result in$10 million in annualsales."