Osteoporosis is a degenerative disease that primarily affects women over the age

Question

Osteoporosis is a degenerative disease that primarily affects women over the age of 60. A research analyst wants to forecast sales of StrongBones, a prescription drug for treating this debilitating disease. She uses the model Sales = beta_0 + beta_1 Population + beta_2 Income + epsilon, where Sales refers to the sales of StrongBones ($ millions), Population is the number of women over the age of 60 (in millions), and Income is the average income of women over the age of 60 ($1,000s). She collects data on 38 cities across the United States and obtains the following relevant regression results: a. What is the sample regression equation? (Enter your answers in millions rounded to 2 decimal places.) b. Interpret the coefficient of population. As the number of women over the age of 60 increases by $1 million, sales of StrongBones is predicted to increase by $7.62 million, holding income constant. As the number of women over the age of 60 increases by $1 million, sales of StrongBones is predicted to increase by $8.47 million. As the number of women over the age of 60 increases by $1 million, sales of StrongBones is predicted to increase by $7.62 million. As the number of women over the age of 60 increases by $1 million, sales of StrongBones is predicted to increase by $8.47 million, holding income constant. c. Predict sales if a city has 1.5 million women over the age of 60 and their average income is $44,000. (Enter your answer in millions rounded to 2 decimal places.)

Explanation / Answer

a)

From the table,

Sales^ = 10.35 + 8.47*Pop + 7.62*inc [ANSWER]

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b)

As the coefficient of population is 8.47, then, holding income constant, by definition,

OPTION D. [ANSWER]

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c)

If Pop = 1.5, Inc = 44, then

Sales^ = 10.35 + 8.47*1.5 + 7.62*44 = 358.335 = 358.34 [ANSWER]

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