Question

Regression analysis was applied between $ sales (y) and $ advertising (x) across all the branches of a major international corporation. The following regression function was obtained.y= 5000 + 7.25xIf the advertising budgets of two branches of the corporation differ by $30,000, then what will be the predicted difference in their sales?a. $217,500b. $222,500c. $5000d. $7.25

Answer 1

Answer:

Step-by-step explanation:

Hello!

Using the variables:

Y: Sales of all branches of a major international corporation.

X: Advertising of all branches of a major international corporation.

The following regression model was estimated:

^Y= 5000 + 7.25Xi

You have to predict a certain value of Y given a value of X:

^Y/X=$ 30000

To do so all you have to do is replace the value in the formula of the regression line:

^Y= 5000 + 7.25*30000

^Y= $ 222500

With a budget difference of $30000 for advertising, the estimated sales difference is $2225000.

I hope it helps!