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Numerical Problems · Q10

Q.Using the advertising-expenditure (X, ₹'000) and sales (Y, ₹ lakh) data from the previous question [X: 2, 4, 6, 8, 10; Y: 3, 6, 7, 10, 14], find the regression equation of Y on X, and use it to estimate sales when advertising expenditure is ₹12,000 (X = 12).

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From the previous question, Xˉ=6\bar X = 6, Yˉ=8\bar Y = 8, ∑xy=52\sum xy = 52, ∑x2=40\sum x^2 = 40.

Step 1 — regression coefficient of Y on X:

byx=∑xy∑x2=5240=1.3b_{yx} = \frac{\sum xy}{\sum x^2} = \frac{52}{40} = 1.3

Step 2 — regression equation:

Y−Yˉ=byx(X−Xˉ)  ⟹  Y−8=1.3(X−6)  ⟹  Y=1.3X−7.8+8=1.3X+0.2Y - \bar Y = b_{yx}(X-\bar X) \implies Y - 8 = 1.3(X-6) \implies Y = 1.3X - 7.8 + 8 = 1.3X + 0.2

Step 3 — estimate at X = 12:

Y=1.3(12)+0.2=15.6+0.2=15.8Y = 1.3(12) + 0.2 = 15.6 + 0.2 = 15.8 …

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