As part of the first-year evaluation for new salespeople, Ada, the sales manager for Umbrella, estimates the second-year sales for each salesperson based on his or her sales for the first year. Using data from company records going back several years, she constructs the following scatter plot:
a). Indicate a range of plausible values for the correlation between first- and second-year sales. Note: The acceptable answers are based solely on what you know about the concept of correlation; you need not calculate anything for this part.
b). Ada fits the least-squares line y = 18.22 + 1.66x where x = first-year sales and y is second-year sales. Interpret both the slope and the y-intercept in the context of the
problem of estimating second-year sales.
c). What is a potential problem, from your perspective, with using the least-squares line to estimate sales and evaluate employees? Note: I expect answers will vary quite a bit on this part.
The question belongs to Statistics and it discusses about calculating the range of plausible values for correlation between 1st and 2nd year sales.
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