The document provides data on advertising expenditures and revenue for Four Seasons restaurants. It instructs to use the least squares method to develop a straight line model of the relationship between expenditures and revenue. It then asks to test if they are related at the 0.05 significance level and prepare a residual plot using the model to analyze residuals and determine if this model should be used or if a better one is needed.

1. Data on advertising expenditures and revenue in thousands $ for the Four Seasons restaurants is:
A) Let x equal advertising expenditures and y equals revenue. Use the method of least squares to
develop a straight line approximation of the relationship betwen the two variables.
B) Test wheather revenue and advertising expenditures are related at a 0.05 level of significance.
C) Prepare a residual plot of y - ^y versus ^y. Use the result from A to obtain the values of ^y
D) What conclusions can you draw from residual analysis? Should this model be used or should
we look for a better one?
Please show all the working out. Thank you.Advertising expendituresRevenue
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