In regression analysis if the dependent variable is measured in dollars, the ind

Question

In regression analysis if the dependent variable is measured in dollars, the independent variable a. must also be in dollars b. must be in some unit of currency c. can be any units d. cannot be in dollars Regression analysis was applied between sales (in $1,000) and advertising (in $100), and the following regression function was obtained. y = 80 + 6.2x Based on the above estimated regression line, if advertising is S10,000, then the point estimate for sales (in dollars) is a. $62, 080 b. $142,000 C. $700 d. $700,000 Regression analysis was applied between sales (in $1000) and advertising (in $100) and the following regression function was obtained. y=500 + 4x 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 A regression analysis between demand (in 1000 units) and price (x in dollars) resulted in the following equation y = 9 - 3x The above equation implies that if the price is increased by $1, the demand is expected to a. increase by 6 units b. decrease by 3 units c. decrease by 6,000 units d. decrease by 3,000 units

Explanation / Answer

27) In regression analysis the independent variable could have any units of measurement because the coefficient of that independent variable could be modified to account for that unit of measurement.

Therefore c) is the correct answer here.

28) Advertising is $10,000 that is 100 times $100 ( because we are taking in $100) as in the regression equation :

y = 80 + 6.2x

y = 80 + 6.2*100 = 700

But as this is in units of $1000, therefore the answer is:

$700,000

Therefore d) is the correct answer here.

29) This is similar to the previous problem:

y = 500 + 4x = 500+4*100 = 900 but this is in $1000 therefore 900,000 is the correct answer here.

Therefore b) is the correct answer here

30) Here x is in dollars, now x = 1

Therefore we get: y = 9 - 3x = 9-3 = 6 but this is in 1000 units, Therefore

6000 units is the correct answer here.

Therefore c) is the correct answer

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