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Chapter: Linear Regression· Mathematics & Statistics (Commerce) Part 2

Following are given information about advertising expenditure and sales.Advertisement expenditure (₹ in lakh) (X)Sales (₹ in lakh) (Y)Arithmetic mean1090Standard deviation312Correlation coefficient between \(X\) and \(Y\) is 0.8(a) Obtain the regress…

Q.5 (A) (ii) Following are given information about advertising expenditure and sales.

Advertisement expenditure (₹ in lakh) (X)Sales (₹ in lakh) (Y)
Arithmetic mean1090
Standard deviation312

Correlation coefficient between \(X\) and \(Y\) is 0.8
(a) Obtain the regression of \(Y\) on \(X\)
(b) What is the likely sales when the advertising budget is ₹15 lakh?

1 answer

Best answer

Answer: (a) \(Y=3.2X+58\); (b) ₹ 106 lakh

\(\bar{x}=10,\ \bar{y}=90,\ \sigma_x=3,\ \sigma_y=12,\ r=0.8\).

(a) \(b_{yx}=r\frac{\sigma_y}{\sigma_x}=0.8\times\frac{12}{3}=3.2\).
Regression of \(Y\) on \(X\): \(Y-\bar{y}=b_{yx}(X-\bar{x})\)
\(Y-90=3.2(X-10)\Rightarrow Y=3.2X+58\).

(b) When \(X=15\): \(Y=3.2(15)+58=48+58=106\). Likely sales are ₹ 106 lakh.

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