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Simple Linear Regression Example Infographic

Simple linear regression allows analysis of the relationship between two variables: an independent variable X and dependent variable Y. The regression line estimates Y as a function of X using coefficients β0 and β1. For example, a study found monthly e-commerce sales (Y) were related to online advertising costs (X) for 7 stores. The regression line equation Y= 125.8 + 171.5*X means sales are predicted to increase $171.5 for each $1 increase in advertising.

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Miguel Angelo Garcia
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225 views1 page

Simple Linear Regression Example Infographic

Simple linear regression allows analysis of the relationship between two variables: an independent variable X and dependent variable Y. The regression line estimates Y as a function of X using coefficients β0 and β1. For example, a study found monthly e-commerce sales (Y) were related to online advertising costs (X) for 7 stores. The regression line equation Y= 125.8 + 171.5*X means sales are predicted to increase $171.5 for each $1 increase in advertising.

Uploaded by

Miguel Angelo Garcia
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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SIMPLE LINEAR REGRESSION

Example

What is simple linear regression?

Simple linear regression allows us to study the


relationship between only two variables:
One variable (X) is called independent variable
The other variable (Y) is known as a dependent variable.

X – the value of the independent variable,


Y – the value of the dependent variable.
Β0 – is a constant
(shows the value of Y when the value of X=0)
Β1 – the regression coefficient
(shows how much Y changes for each unit change in X)

Online Monthly Online Example :


Store E- Commerce Advertising
Sales Dollars
(in 1000 s) (1000 s) You have to study the relationship between the
monthly e-commerce sales and the online advertising
costs. You have the survey results for 7 online stores
1 368 1.7 for the last year.
2 340 1.5
3 665 2.8 Your task is to find the equation of the straight line
4 954 5 that fits the data best.
5 331 1.3
6 556 2.2 The table on the left represents the survey results
7 376 1.3 from the 7 online stores.

Scatter diagram
We can see that there is a positive relationship
With The Regression Line:
between the monthly e-commerce sales (Y)
and online advertising costs (X).

Y= 125.8 + 171.5*X

The regression line shows the predicted


score on e-commerce sales for each
possible value of the online advertising
costs.

Note: You can find easily the values for Β0 and Β1 with the help of paid or free
statistical software, online linear regression calculators or Excel.

Interpretation of the results:

The formula estimates that for each increase of 1 dollar in online


advertising costs, the expected monthly e-commerce sales are
predicted to increase by $171.5.

http://intellspot.com

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