Regression analysis was applied between sales (in $1000s) and advertising (in $100s), and the following regression function was obtained. ? $\hat { y }$ = 500 + 4x
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Based on the above estimated regression line, if advertising is $10,000, then the point estimate for sales (in dollars) is _____.
A) $900
B) $900,000
C) $40,500
D) $505,000

Question

Quizplus · Accepted Answer

To find the point estimate for sales when advertising is $10,000, first convert $10,000 into the units used in the regression equation ($100s). $10,000 = 100 * $100. Substitute x = 100 into the regression equation: $\hat { y }$ = 500 + 4(100) = 500 + 400 = 900 (in $1000s). To convert this back to dollars, multiply by 1000, resulting in $900,000.

Regression Analysis Was Applied Between Sales (In $1000s) and Advertising y^\hat { y }y^​

Regression Analysis Was Applied Between Sales (In $1000s) and Advertising $\hat { y }$