A small business hires a consultant to predict the value of weekly sales of their product if
Question:
A small business hires a consultant to predict the value of weekly sales of their product if their weekly advertising is increased to \(\$ 2000\) per week. The consultant takes a record of how much the firm spent on advertising per week and the corresponding weekly sales over the past six months. The consultant writes, "Over the past six months the average weekly expenditure on advertising has been \(\$ 1500\) and average weekly sales have been \(\$ 10,000\). Based on the results of a simple linear regression, I predict sales will be \(\$ 12,000\) if \(\$ 2000\) per week is spent on advertising."
a. What is the estimated simple regression used by the consultant to make this prediction?
b. Sketch a graph of the estimated regression line. Locate the average weekly values on the graph.
Step by Step Answer:
Principles Of Econometrics
ISBN: 9781118452271
5th Edition
Authors: R Carter Hill, William E Griffiths, Guay C Lim