Question

​Café Michigan's​ manager, Gary​ Stark, suspects that demand for mocha latte coffees depends on the price being charged. Based on historical​ observations, Gary has gathered the following​ data, which show the numbers of these coffees sold over six different price​ values:

Price	Number Sold
$2.50	765
$3.50	505
$2.00	990
$4.10	245
$3.10	320
$4.10	480

Using simple linear regression and given that the price per cup is ​$1.85 the forecasted demand for mocha latte coffees will be ___cups ​(enter your response rounded to one decimal​ place).

Answer 1

Answer:

• 927.9

Explanation:

• Let the regression equation be :
• ​​​​​​​Y = MX+C
• Where Y is the sales, x is the no. of the price. M and C are constants.
• Now placing the data in excel sheet and running regression analysis in excel below is the output

• So the coefficient of intercept = C and the coefficient of price = M
• Regression equation: sales = 1438.32 + (-275.90*price)
• Putting price = 1.85
  • No. of units sold = 927.9 (Answer)