Question

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

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.

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Answer #1

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