Question

Brewsky's is a chain of micro-breweries. Managers are interested in the costs of the stores and believe that the costs can be explained in large part by the number of customers patronizing the stores. Monthly data regarding customer visits and costs for the preceding year for one of the stores have been entered into the regression analysis and the analysis is as follows: 1462 Average monthly customer visits Average monthly total costs $ Regression Results 1496 Intercept $ s 2.05 b coefficient 0.00814 In a regression equation expressed asyo+bx, how is the letter best described ICSLO 2,5) An estimate of the probability of return customers The fixed costs per customer visit The estimate of the cost for an additional customer vist. The proximity of the data points to the regression ine.

Answer 1

Answer

Correct option is ''C'' the estimate ofcost for an additional customer visit.

In a regression equation y=a +bx

a is intercept which remains constant and shows the fixed cost in this case.

b is the slope of the line and it represents the amount of change in y with the change in x.

So in the given case y represents the total cost of store and x represnet the customer visit, so b represent how much the total cost changes with change in 1 customer visit.

So, b represent the estimate ofcost for an additional customer visit.