Question

For various open positions at a company, the Human Resource manager decided to track the advertising dollars spent to announce that position as well as the number of applicants for each position. He recorded the number of applicants in thousands (000) and he recorded advertising expenditure in hundreds of dollars. Then, he developed a regression equation to estimate the number of applicants. The equation appears: Y = 1 + 0.6X.
Which of the following is correct?

A. With a $150 advertising budget, one may expect 1,900 individuals to apply

B. For each additional dollar of advertising, 7 individuals apply.

C. With a $150 advertising budget, one may expect 107 individuals to apply

D. Both A and B are correct

Answer 1

The given regression equation to estimate the number of applicants is as follows :

Y = 1 + 0.6X.

Where X is measure in hundreds of dollars and Y in thousands of applicants.

Let's check option 1)

divide 150 by 100 and then plug it in above regression equation:

that is plug X = 150/100 = 1.50

Y = 1 + 0.6 * 1.50 = 1.9

Now convert it into original unit. That is is thousands

Therefore Y = 1.9 * 1000 = 1900 applicants

So option A is correct.

Let's check option B

For each addition dollar of advertising , {0.6*(1/100)}*1000 = 0.6 * 0.01*1000 = 6 individuals apply

so option B is not correct.

So correct choice is A.  With a $150 advertising budget, one may expect 1,900 individuals to apply