Question

An advertising firm wishes to demonstrate to potential clients the effectiveness of the advertising campaigns it has conducted. The firm is presenting data from

9

recent campaigns, with the data indicating a correlation between advertising and sales. In particular,

r=0.61

for the variables cost of advertising campaign and resulting percentage increase in sales for the

9

campaigns.

Using this information, test for a significant linear relationship between these two variables by doing a hypothesis test regarding the population correlation coefficient

ρ

. (Assume that the two variables have a bivariate normal distribution.) Use the

0.05

level of significance, and perform a two-tailed test. Then fill in the table below.

(If necessary, consult a list of formulas.)

The null hypothesis:	H0:
The alternative hypothesis:	H1:
The type of test statistic:	(Choose one)Z,t,Chi square, F
		Degree of freedom:
The value of the test statistic: (Round to at least three decimal places.)
The p-value: (Round to at least three decimal places.)
Based on the data, can we conclude (using the 0.05 level) that there is a significant linear relationship between the cost of the advertising campaign and the resulting percentage increase in sales?		Yes	No

Answer 1