Alan Ho, a market analyst for Clear Sound Inc., is analyzing sales of heavy metal CD's.Alan's dependent variable is annual heavy metal CD sales (in $1,000,000's), and his independent variables are teenage population (in 1,000's)and type of sales district (0 = urban, 1 = rural).Regression analysis of the data yielded the following tables: For two sales districts with the same number of teenagers one urban and one rural, Alan's model predicts ___.
A)$1,566,666 higher sales in the rural district
B)the same sales in both districts
C)$1,566,666 lower sales in the rural district
D)$1,700,000 higher sales in the urban district
E)$ 1,700,000 lower sales in the rural district

Question

Alan Ho, a market analyst for Clear Sound Inc., is analyzing sales of heavy metal CD's.Alan's dependent variable is annual heavy metal CD sales (in $1,000,000's), and his independent variables are teenage population (in 1,000's)and type of sales district (0 = urban, 1 = rural).Regression analysis of the data yielded the following tables:  For two sales districts with the same number of teenagers one urban and one rural, Alan's model predicts ___.
A)$1,566,666 higher sales in the rural district 
B)the same sales in both districts 
C)$1,566,666 lower sales in the rural district 
D)$1,700,000 higher sales in the urban district 
E)$ 1,700,000 lower sales in the rural district

Quizplus · Accepted Answer

According to the regression table, the coefficient for the type of sales district (rural) is -1.566. This means that, holding the teenage population constant, the predicted sales for a rural district are $1,566,666 lower than for an urban district. Therefore, if two sales districts have the same number of teenagers, the model predicts lower sales in the rural district compared to the urban district.

Alan Ho, a Market Analyst for Clear Sound Inc