Question

A shoe store developed the following estimated regression equation relating sales to inventory investment and advertising expenditures.

ŷ = 29 + 10x₁ + 8x₂

where

x1	=	inventory investment ($1,000s)
x2	=	advertising expenditures ($1,000s)
y	=	sales ($1,000s).

(a)

Predict the sales (in dollars) resulting from a $15,000 investment in inventory and an advertising budget of $11,000.

(b)

Interpret b₁ and b₂ in this estimated regression equation.

Sales can be expected to increase by $ for every dollar increase in inventory investment when advertising expenditure is held constant. Sales can be expected to increase by $ for every dollar increase in advertising expenditure when inventory investment is held constant.

Answer 1

For further queries, please comment below.

Thank you.