Expected Revenue Calculation in Multiple Regression

Very Hard Multiple Regression Analysis Regression Coefficients

Consider a multiple regression model intended to assess the impact of two independent variables, X1 and X2, on a dependent variable Y. The regression equation is formulated as follows:

$Y = \beta_0 + \beta_1 X_1 + \beta_2 X_2 + \epsilon$

In this equation, Y is the total revenue generated by a company, X1 is the amount spent on advertising, and X2 is the amount spent on promotions. After conducting the regression analysis, the estimated coefficients are found to be:

$\hat{\beta_0} = 200$, $\hat{\beta_1} = 5$, $\hat{\beta_2} = 3$.

Using these coefficients, calculate the expected revenue Y when the amount spent on advertising is $10,000$ and the amount spent on promotions is $20,000$. Furthermore, interpret the coefficients to determine the impact of each independent variable on revenue.

The expected revenue is $86,000$. Each additional dollar spent on advertising increases revenue by $5, and each dollar spent on promotions increases revenue by $3.

The expected revenue is $112,000$. Each additional dollar spent on advertising increases revenue by $3, and each dollar spent on promotions increases revenue by $5.

The expected revenue is $106,000$. Each dollar spent on advertising increases revenue by $3, and each dollar spent on promotions increases revenue by $5.

Hint

Submitted7.3K

Correct6.7K

% Correct91%