You work for Segway, in the sales division of the One S1 (which is basically a m

Question

You work for Segway, in the sales division of the One S1 (which is basically a motorized unicycle without the seat). You’ve collected data on monthly sales (S) and the price of the One S1 (P), both in dollars, as well as the daily average summer temperature in your most popular market (T) in degrees Fahrenheit. You estimate the following regression model: S = a + bP + cT. In your regressions, you usually look for a 10%-or-better level of confidence. Question 11 a. What expected sign? Your regression yields the following results: Adjusted R Square 0.733 Independent Variables Coefficients Standard Error t Stat P-value Intercept 51165 4980 10.275 0.00015 P -38.50 8.42 -4.573 0.00598 T 29.07 32.56 0.893 0.41285 Interpret what these coefficients mean. Adjusted R Square 0.733 Independent Variables Coefficients Standard Error t Stat P-value Intercept 51165 4980 10.275 0.00015 P -38.50 8.42 -4.573 0.00598 T 29.07 32.56 0.893 0.41285 Question 12 The estimated coefficient for aa (intercept) suggests that Select one: a. Sales will be $51,165 per month when PP and TT are at their optimal values. b. If PP and TT are zero, we could still expect about $51,165 in sales per month. c. aa cannot be interpreted with confidence since its parameter estimate is not statistically significant. d. Sales will range between $4,980 and $51,165 per month, but not outside those limits. Question 13 The estimated coefficient for bb (price of the One S1) suggests that Select one: a. monthly sales will increase by $8.42 if the price of the One S1 decreases by $38.50. b. when price is close to $38.50, then consumers will demand one more unit per month if price drops by $4.57. c. a $1 increase in the price of the One S1 is associated with a decrease of monthly sales of $38.50. d. a one-dollar increase in price is associated with an increase in monthly sales of 8.42 units. Question 14 The estimated coefficient for cc (daily average summer temperature) suggests that Select one: a. a one-degree decrease in temperature is associated with a $32.56 increase in monthly sales. b. a one-degree decrease in temperature is associated with a $0.893 increase in price. c. temperature has a more important effect on our sales than does the price of our units, since c>bc>b . d. a one-degree increase in temperature is associated with a $29.07 increase in monthly sales. Question 15 The price of the One S1 has a statistically significant effect on our sales. Select one: True False Question 16 Daily average summer temperature affects the sales of the One S1 in a statistically significant way. Select one: True False Question 17 What portion of the total variation in sales of the One S1 remains unexplained? Select one: a. 0.267, or 26.7% b. 38.50% c. 10.275% d. 0.733, or 73.3% Question 18 Segway is considering selling the One S1 in a new city, where the average daily summer temperature is 65°, for a price of $570. What level of sales would you expect in this new city (rounded to the nearest dollar)?

Explanation / Answer

regression yields the following results:

Adj. R-square 0.733
Variable   Coefficient   Standard Error   t-stat   P-value
Intercept   51165   4980   10.275   0.00015
P   -38.50   8.42   -4.573   0.00598
T   29.07   32.56   0.893   0.41285

the regression equation is sales = 51165 -38.65*P +29.07*T

12
The estimated coefficient for aa (intercept) suggests that If PP and TT are zero, we could still expect about $51,165 in sales per month

13

The estimated coefficient for bb (price of the One S1) suggests that One S1 is associated with a decrease of monthly sales of $38.50.

For every unit change in P the value of sales decreases by 38.5 units

14

The estimated coefficient for T (daily average summer temperature) suggests that
d. a one-degree increase in temperature is associated with a $29.07 increase in monthly sales

For every unit change in T the value of sales increases by 29.07 units

15

The price of the One S1 has a statistically significant effect on our sales. True
as the p value is 0.00598, which is less than 0.05 , hence the result is statistically signficant

16

Daily average summer temperature affects the sales of the One S1 in a statistically significant way.

False ,    0.41285 is less than 0.05 , hence the result is not signficant

17
Look at the rsquare value Adj. R-square 0.733
hence d , 73.3% variation is explained by the model

18
using the regression equation

sales = 51165 -38.65*P +29.07*T

put the values of P = 570 and T = 65

sales = 51165 -38.65*570 +29.07*65 = 31024.05

Hope this helps !!
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