Data were collected on monthly sales revenues (in $1000s) and monthly advertisin

Question

Data were collected on monthly sales revenues (in $1000s) and monthly advertising expenditures ($100s) for a sample of drug stores. The regression line relating revenues (Y) to advertising expenditure (X) is estimated to be = -48.3 +9.00x. The correct interpretation of the slope is that for each additional 

A$1000 in sales revenue, advertising expenditures decrease by $48.30
B$100 in sales revenue, advertising expenditures decrease by $48.30
C$100 spent on advertising, predicted sales revenue increases by $9000
D$1 spent on advertising, predicted sales revenue increases by $9000
E$100 spent on advertising, predicted sales revenue decreases by $9000

Explanation / Answer

FORMULA FOR LINE = Y=MX+C

WHERE M = SLOPE

IN REGRESSION LINE EQUATION Y = -48.3 +9X

HENCE SLOPE = 9

WHICH IS POSITIVE

HENCE ITS INTERPRETATION WILL BE THAT 0NE INCREASE IN ADVERTISING WILL LEAD TO INCREASE BY 9000. HENCE OPTION C IS CORRECT, A POSITIVE SLOPE ALWAYS SHOW THE INCREASE

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