Hiroshi Sato, an owner of a sushi restaurant in San Frandisco, has been followin

Question

Hiroshi Sato, an owner of a sushi restaurant in San Frandisco, has been following an aggressive markeing campaign to thwart the effect of rising unemployment rates on business. He ($1 000s), advertising costs (S), and the unemployment rate (%) from January 2008 to May 2009 to estimate the following sample regression equation: used monthly data on sales Sales, 13.38 +0.03AdvertisingCos1-0.42Unemployment Rate-t a. Hiroshi had budgeted $660 toward advertising costs in May 2009. Make a forecast for Sales for June 2009 if the unemployment rate in May 2009 was 9.9%. (Enter your answer it dollars not in thousands.) b. What will be the forecast if he raises his advertisement budget to $6907 (Enter your answer in dollars not in thousands.) es c. Reevaluate the above forecasts if the unemployment rate was 10.5% in May 2009, (Enter your answers in dollars not in thousands.) Sales tising 660 690 285 3

Explanation / Answer

from abvoe regression equation:

a) sales =(13.38+0.03*660-0.42*9.9)*1000=29022

b) sales =(13.38+0.03*690-0.42*9.9)*1000=29922

c)

from above

advertising sales 660 28770 690 29670

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