The fitted regression is Sales = 904-25.1 Price. (a-1) If Price = 1, what is the

Question

The fitted regression is Sales = 904-25.1 Price. (a-1) If Price = 1, what is the prediction for Sales? (Round your answer to 1 decimal place.) Sales (a-2) Choose the correct statement. O An increase in price increases sales. O An increase in price decreases sales. A decrease in price decreases sales (b) If Price = 24, what is the prediction for Sales? (Round your answer to the nearest whole number.) Sales (c) Choose the right option O The intercept is meaningful as sales will be maximized when price is zero. O The intercept is not meaningful as a zero price is both unrealistic and unobserved.

Explanation / Answer

(a-1) The prediction here is computed as:

Sales = 904 - 25.1 = 878.9

Therefore the predicted value here is: Sales = 878.9

(a-2) As the coefficient slope for price is negative here, therefore an increase in price decreases sales here.

(b) The predicted value here is computed as:

Sales = 904 - 25.1*24 = 301.6 that is 302 rounded to nearest whole number

Therefore 302 is the predicted value here.

(c) The intercept here is not meaningful as the price cannot be 0, therefore b is the correct option here.

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