A regression analysis between sales (Y in $1000) and advertising (X in dollars) resulted in the following equation = 30,000 + 4 X
The above equation implies that an
A)increase of $4 in advertising is associated with an increase of $4,000 in sales
B)increase of $1 in advertising is associated with an increase of $4 in sales
C)increase of $1 in advertising is associated with an increase of $34,000 in sales
D)increase of $1 in advertising is associated with an increase of $4,000 in sales

Question

A regression analysis between sales (Y in $1000) and advertising (X in dollars) resulted in the following equation  = 30,000 + 4 X
The above equation implies that an
A)increase of $4 in advertising is associated with an increase of $4,000 in sales 
B)increase of $1 in advertising is associated with an increase of $4 in sales 
C)increase of $1 in advertising is associated with an increase of $34,000 in sales 
D)increase of $1 in advertising is associated with an increase of $4,000 in sales

Quizplus · Accepted Answer

The coefficient of X in the equation is 4, which means that for every $1 increase in advertising, there is an increase in sales of $4,000 (not $4 or $34,000). Therefore, the correct choice is (D).

A Regression Analysis Between Sales (Y in $1000) and Advertising