1) A manager has estimated a simple linear regression model with an explanatory variable (amount spent on advertisement in thousands of dollars) and a response variable (Sales in thousands of dollars). Further assume that he has checked the assumptions and all four assumptions seem reasonable. The estimated model is the following:

Predicted sales (thousands of dollars) = 100+9x (where x = amount spent on advertisement in thousands of dollars).

Some additional helpful information: The range of the values of the explanatory variable are between $10,000 and $150,000.

Report the predicted sales value when they spend $15,000 on advertising.

$235,000

$135,100

$23,500

$13,510

2) A manager has estimated a simple linear regression model with an explanatory variable (amount spent on advertisement in thousands of dollars) and a response variable (Sales in thousands of dollars). Further assume that he has checked the assumptions and all four assumptions seem reasonable. The estimated model is the following:

Predicted sales (thousands of dollars) = 100+9x (where x = amount spent on advertisement in thousands of dollars).

Some additional helpful information: The range of the values of the explanatory variable are between $10,000 and $150,000.

Assume this manager just received information that the current company plan is to spend $175,000 on advertising. This managerdecides to use the simple linear regression model fit to predict the sales. The manager reports he predicts the sales of 1675 thousand dollars when the company spends 175 thousand dollars on advertising. Select the best statementbelow.

The manager performed correct numericalcalculations; however, they reportedan incorrect conclusion.

The manager performed incorrectnumerical calculations and reported anincorrect conclusion.

The manager performed correct numerical calculations and reported a correct conclusion.

The manager performed incorrect numericalcalculations; however, they reported acorrect conclusion.