Consider the following to answer the question(s) below:
Suppose that data on labour productivity and unit labour costs were obtained for the retail industry from 1990 through 2009. A regression was estimated to describe the linear relationship between the two variables.
-A model of retail sales of furniture and fixtures in Canada as a function of the value of building permits yielded the following equation. log10 Sales = 2.33 + 0.57 log10 Value of permits
What is the predicted value of retail sales if the value of building permits is 700,000?
A) $458,887.14
B) $5.66
C) $2,137.96
D) $3.33
E) $22,060.33

Question

Consider the following to answer the question(s) below:
Suppose that data on labour productivity and unit labour costs were obtained for the retail industry from 1990 through 2009. A regression was estimated to describe the linear relationship between the two variables. 
-A model of retail sales of furniture and fixtures in Canada as a function of the value of building permits yielded the following equation. log10 Sales = 2.33 + 0.57 log10 Value of permits
What is the predicted value of retail sales if the value of building permits is 700,000?
A) $458,887.14 
B) $5.66 
C) $2,137.96 
D) $3.33 
E) $22,060.33

Quizplus · Accepted Answer

Using the given equation, we substitute the value of the log10 value of permits as 5.8451 (log of 700,000):

log10 Sales = 2.33 + 0.57(5.8451)

log10 Sales = 5.6077

Converting this back to sales, we get:

Sales = 10^5.6077 = $458,887.14

Therefore, the predicted value of retail sales if the value of building permits is 700,000 is $458,887.14.

Consider the Following to Answer the Question(s) Below