Assume that you have fit a simple linear regression model with an explanatory va
ID: 3023226 • Letter: A
Question
Assume that you have fit 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 you have checked the assumptions and all 4 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 and 150, the median of the explanatory is 75 and the sample mean of the explanatory variable is 71. The range of values of the response variable are between 30 and 200, the median of the response variable is 105 and the sample mean of the response variable is 85. The RSquared values is 0.89.
The narrowest prediction interval for sales at an individual store occurs when the store spends _________ thousand dollars on advertisement.
Fill in the blank with a numerical value.
Explanation / Answer
The narrowest prediction interval for sales at an individual store occurs when the store spends 9 thousand dollars on advertisement.