Monthly sales (S)
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:
Adjusted R Square 0.820
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)?