Question

A regression analysis between sales (Y in $1000) and advertising (X in dollars) resulted in the following equation = 30,000 + 4 X

The above equation implies that _____.

(A) an increase of $4 in advertising is associated with an increase of $4,000 in sales
(B) increase of $1 in advertising is associated with an increase of $4 in sales
(C) increase of $1 in advertising is associated with an increase of $34,000 in sales
(D) increase of $1 in advertising is associated with an increase of $4,000 in sales

Answer 1

(D) increase of $1 in advertising is associated with an increase of $4,000 in sales

Step-by-step explanation:

The regression analysis yielded the following equation, with sales (Y in $1000) and advertising (X in dollars):

`Y(X) = 30,000 + 4X`

The rate of change is 4, which means that for each unit increase in X, there will be a 4 unit increase in Y.

Since X is given in dollars and Y is given in $1000. An increase of $1 in X (advertising) is associated with an increase of $4,000 in Y (sales).

Therefore, the answer is (D).