Regression analysis was applied between sales (y in $1000) and advertising (x in $100) and the following estimated regression equation was obtained. $\hat { y }$ = 80 + 6.2x

Based on the above estimated regression line, if advertising is $10,000, then the point estimate for sales (in dollars) is
A) $62,080.
B) $142,000.
C) $700.
D) $700,000.

Question

Regression analysis was applied between sales (y in $1000) and advertising (x in $100) and the following estimated regression equation was obtained.   $\hat { y }$ = 80 + 6.2x
 
Based on the above estimated regression line, if advertising is $10,000, then the point estimate for sales (in dollars) is
A) $62,080.
B) $142,000.
C) $700.
D) $700,000.

Quizplus · Accepted Answer

The advertising amount of $10,000 is equivalent to 100 units of $100 (since x is in $100). Substituting x = 100 into the regression equation: $\hat{y} = 80 + 6.2(100) = 80 + 620 = 700$. Since y is in $1000, the point estimate for sales is $700,000.

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