A regression analysis between sales (in $1,000) and advertising (in $1,000) resulted in the following least squares line: .This implies that:

A) as advertising increases by $1,000,sales increases by $5,000.
B) as advertising increases by $1,000,sales increases by $80,000.
C) as advertising increases by $5,sales increases by $80.
D) None of these choices.

Question

A regression analysis between sales (in $1,000) and advertising (in $1,000) resulted in the following least squares line:

.This implies that:

A) as advertising increases by $1,000,sales increases by $5,000.
B) as advertising increases by $1,000,sales increases by $80,000.
C) as advertising increases by $5,sales increases by $80.
D) None of these choices.

Alexis Villegas · Accepted Answer

Final Answer : A, Explanation :  The least squares line shows the relationship between sales and advertising. In this case, the line implies that for every $1,000 increase in advertising, sales will increase by $5,000. Therefore, choice A is the best answer. Choice B is incorrect as it implies an unrealistic large increase in sales for a small increase in advertising. Choice C is incorrect as it implies a very small increase in sales for a larger increase in advertising.

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