Question

Osteoporosis is a degenerative disease that primarily affects women over the age of 45. A research...

Osteoporosis is a degenerative disease that primarily affects women over the age of 45. A research analyst wants to forecast sales of StrongBones, a prescription drug for treating this debilitating disease. She uses the model Sales = β0 + β1Population + β2Income + ε, where Sales refers to the sales of StrongBones (in \$1,000,000s), Population is the number of women over the age of 45 (in millions), and Income is the average income of women over the age of 45 (in \$1,000s). She collects data on 40 cities across the United States and obtains the following regression results:

 Coefficients Standard Error t Stat p-Value Intercept 10.19 3.25 3.14 0.0057 Population 8.19 1.39 5.89 0.0098 Income 7.58 6.57 1.15 0.3691

a. What is the sample regression equation? (Enter your answers in millions rounded to 2 decimal places.)

Salesˆ=_________+____________ Population + _____________ Income.

b-1. Interpret the coefficient of population.

• As the number of women over the age of 45 increases by 1 million, sales of StrongBones is predicted to increase by \$8.19 million.

• As the number of women over the age of 45 increases by 1 million, sales of StrongBones is predicted to increase by \$7.58 million.

• As the number of women over the age of 45 increases by 1 million, sales of StrongBones is predicted to increase by \$8.19 million, holding income constant.

• As the number of women over the age of 45 increases by 1 million, sales of StrongBones is predicted to increase by \$7.58 million, holding income constant.

b-2. Interpret the coefficient of income.

• As the average income of women over the age of 45 increases by \$1,000, sales of StrongBones is predicted to increase by \$8.19 million.

• As the average income of women over the age of 45 increases by \$1,000, sales of StrongBones is predicted to increase by \$7.58 million.

• As the average income of women over the age of 45 increases by \$1,000, sales of StrongBones is predicted to increase by \$8.19 million, holding population constant.

• As the average income of women over the age of 45 increases by \$1,000, sales of StrongBones is predicted to increase by \$7.58 million, holding population constant.

c. Predict sales if a city has 2.0 million women over the age of 45 and their average income is \$43,000. (Enter your answer in millions rounded to 2 decimal places.)

Sales -- ________________

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