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Basic Question 1 of 2
The following model was fitted to a sample of supermarkets to explain profit levels:
Y-hatt = profits in thousands of dollars
X1t = food sales in tens of thousands of dollars.
X2t = nonfood sales in tens of thousands of dollar.
Y-hatt = 132.3 + 0.031 X1t + 0.089 X2t + et
where
Y-hatt = profits in thousands of dollars
X1t = food sales in tens of thousands of dollars.
X2t = nonfood sales in tens of thousands of dollar.
For a $30,000 increase in food sales, by how much would the predicted value of the dependent variable change?
User Contributed Comments 2
| User | Comment |
|---|---|
| danlan2 | in sales in tens of thousands, $30000 is converted to 3 in X_{1t} |
| cfastudypl | thanks danlan2. 0.031*3 = 0.093. |
Your review questions and global ranking system were so helpful.
Lina
Learning Outcome Statements
formulate a multiple linear regression model, describe the relation between the dependent variable and several independent variables, and interpret estimated regression coefficients;
CFA® 2025 Level II Curriculum, Volume 1, Module 1.