Question

Suppose a simple linear regression analysis generates the following equation: y = 10 + 15*X

X = amount in dollars spent on advertising
Y = amount dollar of sales

Which of the following is the correct interpretation of these results? If none of these then select “none”.

a) none of these

b)$1 increase in advertising would generate an estimated increase of $15 in sales

c)$1 increase in advertising would generate an estimated increase of 10 + 15 (= $25) in sales

Answer 1

Answer: b) $1 increase in advertising would generate an estimated increase of $15 in sales

Explanation:

We know that interpretation for slope in regression line Y =b0 + b1X is:

One unit change in X will change Y by b1 units.

Here

y = 10 + 15*X , hence One unit change in X will change Y by 15 units.

that is : $1 increase in advertising would generate an estimated increase of $15 in sales

option a is not possible because there is interpretation. option c is wrong because intercept term can not be added (it is constant for all)