Osteoporosis is a degenerative disease that primarily affects women over the age of 60. A research analyst wants to forecast sales of StrongBones, a prescription drug for treating this debilitating disease. She uses the model Sales = Bo + B1Population + B2Income + ɛ, where Sales refers to the sales of StrongBones (in $1,000,000s), Population is the number of women over the age of 60 (in millions), and Income is the average income of women over the age of 60 (in $1,000s). She collects data on 38 cities across the United States and obtains the following regression results: Standard ETITE t Stat p-Value 0.0199 0.0062 Coefficients Error Intercept Population Income 4.02 2.71 6.63 10.35 2.57 8.47 3.12 1.15 7.62 0.2661
Correlation
Correlation defines a relationship between two independent variables. It tells the degree to which variables move in relation to each other. When two sets of data are related to each other, there is a correlation between them.
Linear Correlation
A correlation is used to determine the relationships between numerical and categorical variables. In other words, it is an indicator of how things are connected to one another. The correlation analysis is the study of how variables are related.
Regression Analysis
Regression analysis is a statistical method in which it estimates the relationship between a dependent variable and one or more independent variable. In simple terms dependent variable is called as outcome variable and independent variable is called as predictors. Regression analysis is one of the methods to find the trends in data. The independent variable used in Regression analysis is named Predictor variable. It offers data of an associated dependent variable regarding a particular outcome.
Answer the following questions. Use the same units as were used in the model. Be careful!
What is the sample regression equation?
Sales = + Population + Income
As the number of women over the age of 60 increases by 1 million, sales of StrongBones is predicted to increase by $ million, holding income constant.
Predict sales if a city has 2 million women over the age of 60 and their average income is $45,000. Answer in millions rounded to 2 decimal places. $ millions
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