Question

reed auto periodically has a special week long sale aas part of advertising campaign. Reed runs one or more television commercials during the weekend preceding the sale. Using data from samples of 5 previous sales the estimated regression model is y=10+5x where y denotes the numbers of cars sold and x denotes the number of TV ads. If reed decides to run 3 TV asds during the weekend preceeding the next sale what is the expected number of cars sold. Please show steps.

Answer 1

25 cars are predicted to be sold after running 3 TV ads.

Explanation:

We are provided a model of the impact of TV ads on car sales:

y=10+5x. where y is cars sold and x is number of TV ads.

We are asked the value of y (cars sold) if 3 TV ads (x) are run.

y=10+5x

y=10+5*(3)

y = 10 + 15

y = 25 cars are predicted to be sold after running 3 TV ads.

Note that the equation is telling us that the expected sales for no ads (x = 0) is still 10. The cost of the ads must be balanced against the additional earnings from the additional 5 cars.