Suppose an estimated regression equation is given by y^= 210 + 3x_1 - 15x_2 wher

Question

Suppose an estimated regression equation is given by y^= 210 + 3x_1 - 15x_2 where y is measured in thousands of dollars, x_1 is measured in thousands of dollars, and x_2 is measured in years. a. If x_1 is held constant and x_2 is increased by 2 years, what will be the exact change in y^? Indicate units in your answer. b. If x_2 is held constant and x_1 is increased by $500, what will be the exact change in y^? Indicate units in your answer. c. To the nearest hundredth, what exactly is y^when x_1 = $2,000 and x_2 = 10 years? Indicate units in your answer.

Explanation / Answer

y = 210 + 3x1 - 15x2

A) If, x2 increases by 2 years then y will decrease by 15*2 = 30 thousands of dollars = $30000

B) If x1 increases by $500, then y will increase by 3*500=1500 thousands of dollars = $150000

C) x1 = 2000

x2 = 10

y = 210 + 3 * 2000 - 15 * 10 = $6060000

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