Question

The director of marketing at Reeves Wholesale Products is studying monthly sales. Regional population, per capita income and the regional unemployment rate were selected as estimators of sales. The regression equation was computed to be (in dollars): Ŷ = 64,100 + 0.394X1 + 9.6X2 – 11,600X3 a) What are the estimated monthly sales for a particular region with a population of 796,000, per capita income of $6,940, and an unemployment rate of 6.0%? (Show your calculations) b) Which would add more to sales, an increased population of 15,000 or an increased per capita income of $1,150? (show your work) c) How many dependent variables are in the regression equation? How many independent variables?

Answer 1

I hope the variables are given in order , that is :

X1: population ,

X2 : per capita income

X3: unemployment rate

a) So, for the given balues , estimated monthly sales is :

So estimated sales $809,364

b) An increased population of 15000 , increases sales by ( 0.394 x 15000 )=$5910  

whereas an increased per capita income of $ 1150 increases sales by ( 9.6 x 1150) = $11040

Clearly , per capita income is more effective in this case.

c) Dependent variable : 1 - Monthly sales

Independent Variables : 3 - Population , per capita income , unemployment rate .