Answer:
a) It is expected to sell 560 cars.
b) The total amount invested is $145,000.
c)
m is the slope of the linear function, and represents <em>the additional amount of cars it will sell due to an additional dollar invested in advertising</em>. Its units of m is [cars/dollar].
b is the y-intercept and represent t<em>he amount of cars the company would sell if there is 0 dollars invested in advertising</em>. It may or not be a representative point in the real world (it depends on how accurate is the linear function and the range where it is valid). The unit of b is [cars].
Step-by-step explanation:
a) If the company invest $90,000, that is 3 times $10,000 plus the originals $60,000. Then, it is expected to sell 560 cars.
b) If the company sold 800 cars, we have 440 cars that corresponds to the original $60,000 and (800-440)=360 cars that correspond to the additional invest.
If an additional 40 cars are sold by an additional $10,000 invest, 340 cars are sold by 340*10,000/40= $85,000.
Then the total amount invested is 60,000+85,000=$145,000.
c) We can estimate the parameters m and b of the equation taking into account one known point ($60,000 corresponds to 440 sold cars) and the known variation (40 sold cars for every $10,000 invested).
Then we can use the known point to estimate b:
The equation is then
m is the slope of the linear function, and represents <em>the additional amount of cars it will sell due to an additional dollar invested in advertising</em>. Its units of m is [cars/dollar].
b is the y-intercept and represent t<em>he amount of cars the company would sell if there is 0 dollars invested in advertising</em>. It may or not be a representative point in the real world (it depends on how accurate is the linear function and the range where it is valid). The unit of b is [cars].