Suppose the sales (1000s of $) of a fast food restaurant are a linear function o

Question

Suppose the sales (1000s of $) of a fast food restaurant are a linear function of the number of competing outlets within a 5 mile radius and the population (1000s of people) within a 1 mile radius. The regression equation quantifying this relation is (sales) = 0.845*(competitors) + 5.79*(population) + 13.889. What would you expect the sales (in 1000s of $) to be of a store that has 4 competitors and a population of 12 thousand people within a 1 mile radius?

Question 4 options:

1) 86.749 2) 72.86 3) We do not know the observations in the data set, so we cannot answer that question. 4) 47.189 5) 58.971

Explanation / Answer

here, Linear equation is

(sales) = 0.845*(competitors) + 5.79*(population) + 13.889

where,

sales=sales (1000s of $) of a fast food restaurant

competitors=number of competing outlets within a 5 mile radius.

population=the population (1000s of people) within a 1 mile radius.

Now, from the question

competitors=4 and population = 12

Therefore,

(sales) = 0.845*4 + 5.79*12+ 13.889

(sales) = 3.38+69+13.889

(sales) =86.749

Hence, the expect the sales (in 1000s of $) to be of a store that has 4 competitors and a population of 12 thousand people within a 1 mile radius is $ 86.749 (in 1000)

Answer is (1).

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