A regression analysis between sales (in $1000)and advertising (in $100)resulted in the following least squares line: .This implies that if advertising is $600,then the predicted amount of sales (in dollars)is $125,000.

Question

A regression analysis between sales (in $1000)and advertising (in $100)resulted in the following least squares line:  .This implies that if advertising is $600,then the predicted amount of sales (in dollars)is $125,000.

Quizplus · Accepted Answer

The least squares line is used to predict the value of the dependent variable (sales) based on the independent variable (advertising). The given line implies that for every increase of $100 in advertising, the predicted sales increase by $11,000. Therefore, if advertising is $600 (in hundreds), the predicted sales would be $11,000 * 6 = $66,000 (in hundreds) or $66,000 * 100 = $6,600, which is not $125,000. Hence, the given statement is false.

A Regression Analysis Between Sales (In $1000)and Advertising (In $100)resulted