A regression analysis between sales (in $1,000)and advertising (in $1,000)resulted in the following least squares line: $\hat { y } = 80 + 5 x$ .This implies that:
A) as advertising increases by $1,000,sales increases by $5,000.
B) as advertising increases by $1,000,sales increases by $80,000.
C) as advertising increases by $5,sales increases by $80.
D) None of these choices.

Question

Quizplus · Accepted Answer

The coefficient of the advertising term (x) in the least squares line is 5, which means that for every increase of 1 in x (in thousands of dollars), there is an expected increase in y (in thousands of dollars) by 5. Therefore, if advertising increases by 1,000, sales are expected to increase by 5,000 ($5,000 = 5 * $1,000).

A Regression Analysis Between Sales (In $1,000)and Advertising (In $1,000)resulted y^=80+5x\hat { y } = 80 + 5 xy^​=80+5x

A Regression Analysis Between Sales (In $1,000)and Advertising (In $1,000)resulted $\hat { y } = 80 + 5 x$