Question

# The following data is collected on the sales rate based on income and advertising for a...

The following data is collected on the sales rate based on income and advertising for a given zip code. Please use multiple regression to develop a forecast model to predict sales for this product, and answer the question below:

 Income Advertising Sales 52 25 20 40 17 14 73 50 30 83 60 35 110 100 40 125 105 42 66 53 28 45 48 22 47 30 19 58 40 26 35 22 10 39 30 13

Which equation is the most appropriate for forecasting sales?

Question 1 options:

 1) Sales = 3.1 + 0.30*Income + 0.04*Advertising
 2) Sales = 3.1 + 0.30*Income
 3) Sales = 2.5 + 0.35*Income
 4) Advertising = 2.5 + 0.35*Income - 0.04*Sales

It is clear that we have to predict the salesusing Income and advertising, so there will be two independent variable(income and advertising) and one dependent (Sales)

So, option B and C are income because there is only independent in each option B and C, which makes these options wrong

option D is also incorrect as the option D equation is calculating advertising using income and sales, but we need to find the sales using income and advertising

So, only option A is a valid answer because it is showing the correct equation format

Sales = 3.1 + 0.30 income + 0.04 advertising

This equation is showing intercept as well as two independent variable (income and advertising) which are used to calculate the sales.

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