Question

Regression analysis was applied between sales data (in $1,000s) and advertising data (in $100s) and the following information was obtained: y=12+1.8x, n=17, SSR=225, SSE=75, and Sb=0.2683. Based on the information provided, if advertising is $3,000, then the point estimate for sales (in dollars) is

Select one:
A. $66,000
B. $5,412
C. $66
D. $17,400
E. None of the above answers is correct

Answer 1

A. $66,000

Explanation:

The relationship between sales data (in $1,000s) and advertising data (in $100s) is:

`y=12+1.8x`

If if advertising is $3,000, then x =$30, and the point estimate for sales (in thousands of dollars) is:

`y(30)=12+1.8*30\\y=66`

Converting it to dollars, the point estimate for sales is:

`S=1,000*66\\S=\$66,000`