A trend line has been fitted to a companys annual sales The

A trend line has been fitted to a company\'s annual sales. The trend is given by y_t = 50 + 5t where t is the time index (t = 1, 2, . . . , n) and y_t is annual sales (in millions of dollars). The implication of this trend line is:

a. sales increase on the average $5 million per year.

b. sales will increase by $5 million every year.

c. sales increase exactly 5 percent every year.

d. sales increase on the average 5 percent per year

Solution

A trend line has been fitted to a company\'s annual sales. The trend is given by y_t = 50 + 5t where t is the time index (t = 1, 2, . . . , n) and y_t is annual sales (in millions of dollars). The implication of this trend line is:

a. sales increase on the average $5 million per year.

b. sales will increase by $5 million every year.

c. sales increase exactly 5 percent every year.

d. sales increase on the average 5 percent per year

Note:   Regression coefficients represent the mean change in the response variable for one unit of change in the predictor variable