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. For a rural household with $90,000 annual income,Abby's model predicts weekly grocery expenditure of ________________.

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.  For a rural household with $90,000 annual income,Abby's model predicts weekly grocery expenditure of ________________.

Quizplus · Accepted Answer

Using the regression equation from the table: 
Weekly grocery expenditure = 54.25 + (0.397*annual household income) + (-115.49*household neighborhood)
We can substitute the values for a rural household with $90,000 annual income: 
Weekly grocery expenditure = 54.25 + (0.397*90) + (-115.49*1)
Weekly grocery expenditure = $224.98

Abby Kratz,a Market Specialist at the Market Research Firm of Saez,Sikes,and