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# Monthly sales (S) Price (P) Daily average summer temperature in your most popular market (T) in degrees Fahrenheit Regression model: S = a + bP + cT....

Monthly sales (S)

Price (P)

Daily average summer temperature in your most popular market (T) in degrees Fahrenheit

Regression model: S = a + bP + cT.

The regression should have a 10%-or-better level of confidence.

a.  signs expected for a, b, and c? a Pos b Pos c Neg

b.  Regression results:

Independent Variable Coefficients Standard Error t Stat P-value

Intercept 1936 309 6.259 0.00153

P rice -4.71 0.81 -5.816 0.00212

T emp 6.57 3.50 1.879 0.11902

Interpret what these coefficients mean.

c.  Does price have a statistically significant effect on sales? YES

d.  Does average temperature have a statistically significant effect on sales? NO

e.  What portion of the total variation in sales remains unexplained? 33%

f.   Widget to be sold in New City with an average daily summer temperature is 73°, for a price of \$320. What level of sales would you expect in this new city (rounded to the nearest dollar)?

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