Question

A company is investigating the relationship between the number of paper clips it purchases (x) and its net income (y). A sharp quant methods analyst obtained a least squares regression line from available data, y= $106,729 - 0.8x. If x = 3000 paper clips are planned to be purchased next month. Predict next month's net income.

Answer 1

Answer:

$104,329

Explanation:

Given that,

Least squares regression line from available data:

y = $106,729 - 0.8x

where,

y = Net income

x = Number of paper clips it purchases

If x = 3,000 paper clips are planned to be purchased next month then the next month's net income is calculated as follows:

= $106,729 - 0.8x

= $106,729 - (0.8 × 3,000)

= $106,729 - $2,400

= $104,329