eBook A shoe store developed the following estimated regression equation relatin

Question

eBook A shoe store developed the following estimated regression equation relating sales to inventory investment and advertising expenditures. where 1 inventory investment ($1000s) z2 advertising expenditures ($1000s) V sales ($1000s) a. Predict the sales resulting from a $15,000 investment in inventory and an advertising budget of $10,000 b. Interpret bi and b2 in this estimated regression equation. b. b: Sales can be expected to Select your answer: by $7 for every dolla ncrease inSelect your ansuwer when Select your anrsheld constant. by $12 for every dollar increase in when select your answer ? is held constant. ? select your answer , : sales can be expected to select your answer

Explanation / Answer

Given: y = 25 + 12*x1 + 7*x2

(a) To predict sales corresponding to x1 = 15, x2 = 10

y = 25 + 12*15 + 7*10 = 275

Thus, the predicted sales is $ 275,000

(b) The typical regression equation can be written as y = b1*x1 + b2*x2 + e ( e is the error term)

b1: sales can be expected to increase by $12 for every dollar increase in investory investment (x1) when advertising expenditures(x2) is held constant.

b2: Sales can be expected to increase by $7 for every dollar increase in x2 when x1 is held constant.

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