Let y = sales at a fast-food outlet (1000s of $), x_1 = number of competing outl
ID: 3132659 • Letter: L
Question
Let y = sales at a fast-food outlet (1000s of $), x_1 = number of competing outlets within a 1-mile radius, x_2 = population within a 1-mile radius (1000s of people), and x_3 be an indicator variable that equals 1 if the outlet has a drive-up window and 0 otherwise. Suppose that the true regression model is Y = 10.00 - 1.5x_1 + 6.8x_2 + 15.4x_3 + epsilon What is the mean value of sales when the number of competing outlets is 4, there are 8000 people within a 1-mile radius, and the outlet has a drive-up window? (Round your answer to one decimal place.) What is the mean value of sales for an outlet without a drive-up window that has three competing outlets and 4000 people within a 1-mile radius? (Round your answer to one decimal place.) Interpret beta_3. There are on average 15.4 fast-food outlets with drive-ups in a 1 mile radius. It takes $15,400 to build a drive-up. A drive-up will add $15,400 to total sales. Approximately 1 in 15.4 fast-food outlets have drive-ups.Explanation / Answer
a) To obtain mean sales, substitute, X1 with 4, X2 with 8000, and X3 with 1 in the given equation.
Y= 10-1.5*4+6.8*8000+15.4*1=54419.4
b) Y=10-1.5*3+6.8*4000+15.4*1=27220.9
c) A drive-up will add 15.4( in thousand) to total sales. Option c.
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