Question 156 The following regression model has been propose

Question 15.6

The following regression model has been proposed to predict sales at a furniture store:

y^{^} = 10 - 4_x1 + 7_x2 + 18_x3

where

x1 = competitor\'s previous day\'s sales (in $1,000s);

x2 = population within 1 mile (in 1000s);

x3 = 1 if any form of advertising was used, 0 if otherwise;

what = sales (in $1,000s).

a. Fully interpret the meanings of the coefficients.

b. Predict sales (in dollars) for a store with competitor\'s previous day\'s sale of $3,000, a population of 10,000 within 1 mile, and six radio advertisements.

I have to use words to explain myself. If you could explain with as much detail as possible how to get the answer it is appreciated. I\'ll give double points if that is possible.

So far I understand regression modles are used to predict trends with not having all of the information availiable. That the dependent variables are the information you have. In this case it is a multiple regression. The dependent varible sales of the furniture store and the independent being x1, x2, x3.

Thank you in advance

Solution

(a) When X3 increases one unit, the value of Y increases 18

(b) Predict sales: 10-4*3+7*10+18*1 =86