A regression analysis between sales (y in $1000) and advertising (x. in dollars) resulted in the following equation: ỹ= 30,000 + 4x The above equation implies that an:
a. increase of $l in advertising is associated with an increase of $4 in sales.
b. increase of $4 in advertising is associated with an increase of $4000 in sales.
c. increase of $1 in advertising is associated with an increase of $34,000 in sales.
d. increase of $1 in advertising is associated with an increase of $4000 in sales.

Correct answer is option d. increase of $1 in advertising is associated with an increase of $4000 in sales.

Step-by-step explanation:

Given the equation of regression analysis is given as:

where is the cost on advertising in Dollars.

and is the sales in Thousand Dollars.

To find:

The correct increase in sales when there is increase in the advertising cost.

Solution:

Suppose there is an increase of in the advertising cost.

Let the initial cost be then the cost will be .

Initial sales

....... (1)

After increase of $1 in advertising cost, final cost:

Subtracting (2) from (1) to find the increase in the sales:

The units of sales is Thousand Dollars ($1000).

So, increase in sales =

So, correct answer is:

d. increase of $1 in advertising is associated with an increase of $4000 in sales.

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step-by-step explanation: