velue: 10.00 points Hiroshi Sato, an owner of a sushi rostaurant in San Francisc

Question

velue: 10.00 points Hiroshi Sato, an owner of a sushi rostaurant in San Francisco, has been following an aggressive marketing campaign to thwart the effect of rising unemployment rates on business. He used monthly data on sales ($1.000s), advertising costs (S), and the unemployment rate (%) fom January estimate the following sample regression equation: 2008 to May 2009 to Sales,- 1135 005Advertising Costst- -o.sAUnemployment Pate a. Hiroshi had budgeted $630 toward advertising costs in May 2009. Make a forecast for Sales for June 2009 if the unemployment rate in May 2009 was 92%. Enter your answer in dollars not in thousands.) Sales b. What will be the forecast if he raises his advertisement budget to $700? (Enter your answer in dollars not in thousands.) Reevaluate the above forecasts if the unemployment rate was 9.6% in May 2009, (Enter your answers in dollars not in thousands.) C. Advertising Sales, 630 700

Explanation / Answer

Let

X1= advertising cost

X2= unemployment rate

Y=Sales

So regression equation is

Y= 11.35 + 0.05X1 - 0.54X2

a)

Given X1 = 630

X2 = 9.2

So

Sales = Y = 11.35 + 0.05(630) - 0.54(9.2)

Sales = 37.882

b)

X1= 700

Y= 11.35 + 0.05(700) - 0.54(9.2)

Sales= 41.382

c)

X1= 630 , X2= 9.6

Y = 11.35 + 0.05(630) - 0.54(9.6)

Sales = 37.666

X1= 700,. X2= 9.6

Y= 11.35 + 0.05(700) - 0.05(9.6)

Sales = 41.166

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