Let y = sales at a fast-food outlet (1000s of $), x 1 = number of competing outl
ID: 3132674 • Letter: L
Question
Let y = sales at a fast-food outlet (1000s of $), x1 = number of competing outlets within a 1-mile radius, x2 = population within a 1-mile radius (1000s of people), and x3 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 1.1x1 + 6.7x2 + 15.3x3 +
(a) What is the mean value of sales when the number of competing outlets is 3, there are 8000 people within a 1-mile radius, and the outlet has a drive-up window? (Round your answer to one decimal place.)
in thousand dollars
(b) What is the mean value of sales for an outlet without a drive-up window that has two competing outlets and 6000 people within a 1-mile radius? (Round your answer to one decimal place.)
in thousand dollars
(c) Interpret 3.
a)It takes $15,300 to build a drive-up.
b)There are on average 15.3 fast-food outlets with drive-ups in a 1 mile radius.
c) A drive-up will add $15,300 to total sales.
d) Approximately 1 in 15.3 fast-food outlets have drive-ups.
Explanation / Answer
a) Substitute X1, X2 and X3 in given equation with 3, 8 and 1.
Y=10-1.1*3+6.7*8+15.3*1=75.6 (in thousand dollars)
b) Y=10-1.1*2+6.7*6+15.3*1=63.3 (in thousand dollars)
c) A drive up will add $ 153000 to total sales, for competing outlet and people within 1-mile radius to be constant. Option c.
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