Osteoporosis is a degenerative disease that primarily affects women over the age
ID: 3051032 • Letter: O
Question
Osteoporosis is a degenerative disease that primarily affects women over the age of 60. A
research analyst wants to forecast sales of StrongBones, a prescription drug for treating the
disease. She uses the model
=
0
+
1
+
2
+
, where,
refers to the sales of StrongBones (in $1,000,000s) in city
,
is the number of
women over the age of 60 (in millions) in city
, and
is the average income of
women
over the age of 60 (in $1,000s) in city
. She collects data on 38 cities across the United States
and obtains the following regression results:
Coefficients
Standard Error
t Stat
p
-
value
Intercept
10.35
4.02
2.57
0.0199
Population
8.47
2.71
3.12
0.0062
Income
7.62
6.63
1.15
0.2661
a.
What is the sample regression equation?
(5 points
b.
Interpret the slope coefficients.
(5 points)
c.
Predict sales for a city that has 1.5 million women over the age of 60 and their average
income is $44,000.
(5 points)
Explanation / Answer
a) The sample regression equation
sales = 10.35 + 8.47*Population + 7.62*Income
b) Inperpretation of the slope coefficients :
For 1 million increase in the number of women over the age of 60, predicted sales will increase 8.47 unit (in $1,000,000s).
For a $1000 increase in average income, predicted sales will increase 7.62 unit (in $1,000,000s).
c) Predicted sales for a city that has 1.5 million women over the age of 60 and their average income is $44,000
= 10.35 + (8.47*1.5) + (7.62*44)
= 358.335
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