A Manager Uses Regression to Express Sales as a Function

question 81

Multiple Choice

A manager uses regression to express sales as a function of advertising expenditures (X1) , and per capita income (X2) in your sales area. The following multiple linear regression equation is developed:
Y = 10 + 0.51X1 + 0.45X2
The coefficient of determination is 0.96
Determine which of the following conclusions is valid regarding the coefficient of determination:

• A) More analysis is needed. The coefficient of determination leaves much unexplained.
• B) The regression line fits the data used in the sample very well. There is a strong indication of the relationship of the two variables with sales.
• C) The coefficient of determination is positive because the constant term is positive.
• D) The coefficient of determination should always be greater than one.

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