Abby Kratz, a market specialist at the market research firm of Saez, Sikes, and Spitz, is analyzing household budget data collected by her firm.Abby's dependent variable is weekly household expenditures on groceries (in $'s), and her independent variables are annual household income (in $1,000's)and household neighborhood (0 = suburban, 1 = rural).Regression analysis of the data yielded the following table. $$\begin{array} { | c | c | c | c | c | }
\hline & \text { Coefficients } & \text { Stardard Error } & t \text { Statistic } & p \text {-value } \
\hline \text { Intercept } & 19.68247 & 10.01176 & 1.965934 & 0.077667 \
\hline x _ { 1 } \text { (income) } & 1.735272 & 0.174564 & 9.940612 & 1.68 \mathrm { E } - 06 \
\hline x _ { 2 } \text { (neighborhood) } & 49.12456 & 7.655776 & 6.416667 & 7.67 \mathrm { E } - 05 \
\hline
\end{array}$$ For a rural household with $90,000 annual income, Abby's model predicts weekly grocery expenditure of ________________.
A)$156.19
B)$224.98
C)$444.62
D)$141.36
E)$175.86

Question

Abby Kratz, a market specialist at the market research firm of Saez, Sikes, and Spitz, is analyzing household budget data collected by her firm.Abby's dependent variable is weekly household expenditures on groceries (in $'s), and her independent variables are annual household income (in $1,000's)and household neighborhood (0 = suburban, 1 = rural).Regression analysis of the data yielded the following table. $$\begin{array} { | c | c | c | c | c | } 
\hline & \text { Coefficients } & \text { Stardard Error } & t \text { Statistic } & p \text {-value } \
\hline \text { Intercept } & 19.68247 & 10.01176 & 1.965934 & 0.077667 \
\hline x _ { 1 } \text { (income) } & 1.735272 & 0.174564 & 9.940612 & 1.68 \mathrm { E } - 06 \
\hline x _ { 2 } \text { (neighborhood) } & 49.12456 & 7.655776 & 6.416667 & 7.67 \mathrm { E } - 05 \
\hline
\end{array}$$ For a rural household with $90,000 annual income, Abby's model predicts weekly grocery expenditure of ________________.
A)$156.19
B)$224.98
C)$444.62
D)$141.36
E)$175.86

Quizplus · Accepted Answer

The correct answer is B because the predicted weekly grocery expenditure for a rural household with $90,000 annual income is $224.98. This is calculated by plugging the values of the independent variables into the regression equation:```Weekly grocery expenditure = 19.68247 + 1.735272 * (90) + 49.12456 * (1) = $224.98```

Abby Kratz, a Market Specialist at the Market Research Firm