A local tire dealer wants to predict the number of tires sold each month.He believes that the number of tires sold is a linear function of the amount of money invested in advertising.He randomly selects 6 months of data consisting of tire sales (in thousands of tires)and advertising expenditures (in thousands of dollars).The equation of the least squares line is, = 3 + 1x. Provide a managerial interpretation of the estimated slope.
A)As sales of tires increase by 1000,we expect advertising expenditures to increase by $1000.
B)If there is no advertising,the sales are expected to be 3000 tires.
C)For every additional thousand dollars in advertising expenditures,we should expect to sell an additional 1000 tires.
D)For every additional thousand dollars in advertising expenditures,we should expect to sell and additional 3000 tires.

Question

A local tire dealer wants to predict the number of tires sold each month.He believes that the number of tires sold is a linear function of the amount of money invested in advertising.He randomly selects 6 months of data consisting of tire sales (in thousands of tires)and advertising expenditures (in thousands of dollars).The equation of the least squares line is,  = 3 + 1x. Provide a managerial interpretation of the estimated slope.
A)As sales of tires increase by 1000,we expect advertising expenditures to increase by $1000. 
B)If there is no advertising,the sales are expected to be 3000 tires. 
C)For every additional thousand dollars in advertising expenditures,we should expect to sell an additional 1000 tires. 
D)For every additional thousand dollars in advertising expenditures,we should expect to sell and additional 3000 tires.

Quizplus · Accepted Answer

The estimated slope of 1 means that for every additional thousand dollars in advertising expenditures, we should expect to sell an additional thousand tires. So, choice C is the correct interpretation.

A Local Tire Dealer Wants to Predict the Number of Tires