Consider the following regression results St 2552 005 At se

Consider the following regression results: S_t, =255.2 + 0.05 A_t se = (102.1) (0.7) where S = monthly sales volume, thousand dollars A = monthly advertising expense, thousands of dollars Would it change the residuals and the fitted values of S if the monthly advertising expense were measured in 100 thousand dollars instead? Explain.

Solution

Yes the values will change when the data is measured in 100 thousand dollars. This is so because when the data changes, the totals also will change whcih will in turn affect the residuals and fitted values.