Regression analysis was applied between sales Y in 1000 and

Regression analysis was applied between sales Y (in $1000) and advertising X (in $100) and the following regression function was obtained.

Y = 500 + 4 X

Based on the above estimated regression line if advertising is $10,000, then the point estimate for sales (in dollars) is

a.      $900

b.      $900,000

c.      $40,500

d.      $505,000

Solution

Y = 500 + 4 * 10,000

Y = 40,500