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

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

Answer 1

option (A) $66,000

Explanation:

Data provided in the question:

Regression model : y = 12 + 1.8x

Here,

y = sales in $1,000

x = advertising in $100s

Advertising = $3,000

Advertising in $100s = $3,000 ÷ $100

= $30

Therefore,

from regression model, we get

y = 12 + 1.8(30)

or

y = 12 + 54

or

y = 66 (in $1000s)

Therefore,

sales = 66 × $1000

= $66,000

Hence,

option (A) $66,000