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:







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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