Chapter 15.7, Problem 34E

Management proposed the following regression model to predict sales at a fast-food outlet.

y = β₀ + β₁x₁ + β₂x₂ + β₃x₃ + ε

where

x₁ = number of competitors within one mile

x₂ = population within one mile (1000s)

$x_3=\{\begin{array}{l}\text{1 if drive-up window present}\\ \text{0 otherwise}\end{array}$

y = sales ($1000s)

The following estimated regression equation was developed after 20 outlets were surveyed.

ŷ = 10.1 − 4.2x₁ + 6.8x₂ + 15.3x₃

1. a. What is the expected amount of sales attributable to the drive-up window?
2. b. Predict sales for a store with two competitors, a population of 8000 within one mile, and no drive-up window.
3. c. Predict sales for a store with one competitor, a population of 3000 within one mile, and a drive-up window.