Question

1. Use the following regression model for the next few questions:

   Bearcat Coffee Shop is a small roastery located in a strip mall at O'fallon, IL. They have built a multiple regression model to try and predict sales at their shop. The model is:

   Sales = 155 + 1.2(Shoppers) - 0.50(Temp) + 350(Weekend)

   The variables are as follows: "Shoppers" is the number of shoppers in the strip mall on a given day. "Temp" is the high temp for the day. "Weekend" is a binary (1/0) variable that indicates whether or not a day falls on a weekend or not.

   What is the expected sales value for a Saturday with a high temperature of 38 degrees, where 800 shoppers are expected at the strip mall?

   		3546
   		1484
   		1446
   		None of these

1. What is the marginal effect of one more shopper being at the strip mall on the expected sales value?

   		None of these
   		Sales decreases by $1.20
   		Sales increases by $1.20
   		Sales remain unchainged

Answer 1

the given multiple regression equation is:-

Sales = 155 + 1.2(Shoppers) - 0.50(Temp) + 350(Weekend)

a).the expected sales value for a Saturday with a high temperature of 38 degrees, where 800 shoppers are expected at the strip mall be:-

1446

[ given data are,

shoppers = 800,

temp = 38 ,

weekend = 1 (because Saturday is a weekend, so the binary variable will take value 1)

so, the predicted sales be:-

= 155 + (1.2*800) - (0.50*38)+ (350*1)

= 1446 ]

b). the marginal effect of one more shopper being at the strip mall on the expected sales value be:-

Sales increases by $1.20

[ we can interpret that ,

for increase of 1 shopper at the strip mall , keeping all the other factors fixed, the sales value increases by 1.2 units ]

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