📊 GMAT Exam Prep

A scatter plot displays the relationship between advertising spending (x-axis) and monthly sales revenue (y-axis) for a company over 12 months. The plot shows a strong positive linear correlation between the two variables. If the company increases its advertising spending by 10% next month, which of the following is the most reasonable prediction for monthly sales revenue?

A It will definitely increase by 10%.
B It will likely increase, but not necessarily by 10%.
C It will remain unchanged due to diminishing returns.
D It will likely decrease as the current spending is already optimal.

✓ Correct Answer: Option B

A strong positive correlation suggests that sales revenue tends to increase with advertising spending. However, correlation does not imply an exact proportional increase, nor does it guarantee future results. Therefore, an increase is likely, but the exact percentage cannot be predicted definitively.

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