Question

To investigate the relationship between amount of sales y (in thousands of dollars) and the amount x (in hundreds of dollars) spent on advertising, a marketing researcher chooses eight cities of approximately equal populations and spends differing amounts on advertising in each city. The sales y and the amount x spent on advertising are recorded for each city. From the data the least squares prediction line is:  = 24.45 + 2.38x.
Interpret the slope of the least squares line.

(A) For each additional hundred dollars spent on advertising, sales are predicted to increase by $2,380.

(B) If no money is spent on advertising, sales are predicted to be $24.45.    

(C) For each additional hundred dollars spent on advertising, sales are predicted to increase by $24,452.

(D) For each additional $1000 dollars in sales, the amount spent on advertising is predicted to increase by $238.

Answer 1

From the given information,

The required correct interpretation of slope is,

For each additional hundred dollars spent on advertising, sales are predicted to increase by $2,380.

i.e., Option (A). is correct.

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