R2(R-square) or coefficient of determination measures the proportion/percent of
ID: 400002 • Letter: R
Question
R2(R-square) or coefficient of determination measures the proportion/percent of variation in the dependent variable accounted for or explained by the independent variables. In the scenario for discussion, the proportion of variation explained by CIS on outdoor sales. A very low R2 here means CIS does not sufficiently account for much variation in outdoor sales. This would suggest there are other pertinent determinants of outdoor sales.
What would you consider the potential determinants of outdoor sales?
Explanation / Answer
The factors that could be potential determinants of outdoor sales are:
- Access to the Location of the retail point
- Average population density of the location and
- purchaing capacity of the population
- Weather of the location allowing or facilitating outdoor sales
- Parking space availability near the location
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