# Computing and analyzing the simple regression equation

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Enterprise Industries produces Fresh, a brand of liquid laundry detergent. In order to study the relationship between price and demand for the large bottle of Fresh, the company has gathered data concerning demand for Fresh over the last 30 sales periods ( each sales period is four weeks). Here, for each sales period,

y = demand for the large bottle of Fresh ( in hundreds of thousands of bottles) in the sales period, and

x = the difference between the average industry price ( in dollars) of competitors' similar detergents and the price ( in dollars) of Fresh as offered by Enterprise Industries in the sales period.

1.-Question a. Find the least square point estimates b0 and b1: Choose the correct answer.

A)b0 = 2.665 and b1 = 7.814

B) b0 = 7.814 and b1 = 2.665

C) b0 = 9.52 and b1 = .60

D)b0 = 9.00 and b1 = .50

2.-Question b. Interpret b0 and b1: Choose the correct answer.

A)b0 = a $7.814 price difference yields an estimated demand of 0

b1 = each increase in $1 of price difference increases estimated demand on average by 2.665 which means 266,500 bottles

B)b0 = a $0 price difference yields an estimated demand of 7.814

b1 = each increase in $2.665 of price difference increases estimated demand on average by 1 which means 266,500 bottles

C) b0 = a $0 price difference yields an estimated demand of 7.814

b1 = each increase in $1 of price difference increases estimated demand on average by 2.665 which means 266,500 bottles

D) b0 = a $0 price difference yields an estimated demand of 0

b1 = each increase in $1 of price difference increases estimated demand on average by 2.665 which means 266,500 bottles

3.-Which one represent the correct equation of the least squares line for this problem? Choose the answer

A)y-hat = b0 + b1x = 7.814 + x

B) y-hat = b0 + b1x = 1 + 2.665x

C)y-hat = b0 + b1x = 2.665 + 7.814x

D)y-hat = b0 + b1x = 7.814 + 2.665x

4.-

What is the point estimate of the mean demand in all sales periods when the price difference is $ 0.30

Choose the correct answer

A)1,077,900

B)781,400

C)861,350

D) 266,500

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##### Solution Summary

The solution gives detailed steps on computing and analyzing the simple regression equation.

##### Solution Preview

1. From the given output, we know that the equation of fitted line is demand=7.814+2.665*Price.

Hence, we know that b0 = 7.814 and b1 = 2.665 because bo is intercept and b1 is ...

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