A manager uses regression to express sales as a function of advertising expenditures (X₁),and per capita income (X₂)in your sales area.The following multiple linear regression equation is developed: Y = 10 + .51X₁ + .45X_2. The coefficient of determination is .96.This coefficient of determination explains that: A)96% of sales variations are due to an error term. B)The dependent variable is not related to advertising expenditures and per capita income. C)96% of sales variations are explained by the equation. D)Only 4% of the sales variations are explained by advertising expenditures and per capital income.

Question

Quizplus · Accepted Answer

The coefficient of determination (R-squared) measures the proportion of variance in the dependent variable (sales) that can be explained by the independent variables (advertising expenditures and per capita income) in the regression equation. In this case, the R-squared is 0.96, which means that 96% of the variations in sales can be explained by the equation. Therefore, option C is the correct answer.

A Manager Uses Regression to Express Sales as a Function