Homework: Chapter 4 Problems Part 2 Score: 0 of 1 pt Problem 4.45 Save 18 of 19
ID: 409842 • Letter: H
Question
Homework: Chapter 4 Problems Part 2 Score: 0 of 1 pt Problem 4.45 Save 18 of 19 (9 complete) HW Score: 34.21%, 6.5 of 19 pts Question Help Café Michigan's manager, Gary Stark, suspects that demand for mocha latte coffees depends on the price being charged. Based on historical observations, Gary has gathered the following data, which show the numbers of these coffees sold over six different price values Price $2.60 $3.60 $2.00 $4.30 $3.20 $4.05 Number Sold 765 510 990 245 315 475 Using simple linear regression and given that the price per cup is $1.85, the forecasted demand for mocha latte coffees will be cups (enter your response rounded to one decimal place)Explanation / Answer
Let the Linear regression equation be :
Y = A + B.X
Where,
Y ( Dependent variable ) = Numbers sold
X ( Independent variable ) = Price per cup
A, B = constants
We now place values of Prices per cup as well Numbers sold as given in the problem in two adjacent columns and apply the formula LINEST ( ) and we get following :
A = 1468.64 , B = - 279.08
Thus,
Y = A + B.X = 1468.64 – 279.08.X
In order to find out demand for coffee given price per cup to be $1.85, we put value of X = $1.85
Therefore , corresponding forecasted demand ( Y) = 1468.64 – 279.08 x 1.85 = 1468.64 – 516.29 = 952.35 ( 952.3 rounded to one decimal place)
THE FORECASTED DEMAND FOR MOCHA LATTE COFFEE WILL BE 952.3 CUPS
THE FORECASTED DEMAND FOR MOCHA LATTE COFFEE WILL BE 952.3 CUPS
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