What can a regression equation predict?

What can a regression equation predict?

• A. Stock market fluctuations
• B. Future values of a dependent variable
• C. Change in market share
• D. Profit margins based on sales

Answer: (B)

A regression equation is designed to analyze the relationship between one or more independent variables and a dependent variable. The primary purpose of developing a regression equation is to predict the future values of the dependent variable based on the known values of the independent variables. By fitting a regression line to existing data, one can estimate and forecast outcomes, making it a powerful tool in statistical analysis and predictive modeling. For example, if you have a regression equation that predicts sales (the dependent variable) based on advertising spend and pricing (the independent variables), you can use this equation to forecast sales for a specific level of advertising and price. This ability to predict future values is foundational to regression analysis, making it an essential tool in various fields, including business, economics, and social sciences.

A regression equation is designed to analyze the relationship between one or more independent variables and a dependent variable. The primary purpose of developing a regression equation is to predict the future values of the dependent variable based on the known values of the independent variables. By fitting a regression line to existing data, one can estimate and forecast outcomes, making it a powerful tool in statistical analysis and predictive modeling.

For example, if you have a regression equation that predicts sales (the dependent variable) based on advertising spend and pricing (the independent variables), you can use this equation to forecast sales for a specific level of advertising and price. This ability to predict future values is foundational to regression analysis, making it an essential tool in various fields, including business, economics, and social sciences.