Regression Analysis Was Applied Between Sales (In $1000) and Advertising

question 66

Multiple Choice

Regression analysis was applied between sales (in $1000) and advertising (in $100) and the following regression function was obtained. = 500 + 4 X Based on the above estimated regression line if advertising is $10,000, then the point estimate for sales (in dollars) is

• A)$900
• B)$900,000
• C)$40,500
• D)$505,000

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Definitions:

Linear

Pertaining to something that is straight or sequential, often used to describe processes or relationships that have a constant rate of change.

Downward-Sloping

Describes a line on a graph that decreases in height as it moves from left to right, indicating a negative relationship between two variables.

Inelastic Demand

A situation where the demand for a product does not significantly change with a change in the product's price, indicating that consumers are less sensitive to price changes.

Total Revenue

The total receipts from sales of a given quantity of goods or services. It is the total income of a business from its sales activity.