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)

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