Regression equation

SJaneT

Hi - can anyone help me in words of one please how I would calculate the values of a & b - I'm practising for MADC exam & this was in AAT practice assessment 1 task 4 - here's the question:

The retail shop delivery costs vary in a linear manner and can be expressed using the regression equation y=a+bx where x = number of units delivered.
Delivery costs for 200 and 2000 units are £5000 and £14000 respectively.
Calculate value of a and b

Well - the answer is a = 4000 and b = 5 - but how on earth would I work that out please?

Really hoping someone can help explain this to me - thanks

Pian32

So if we had a graph b is your gradient and a would be your intercept.

We can calculate b first:
(14000-5000) / (2000/200) = 9000/1800 = 5

Then from here substitute your value of b into any of the expressions.

5000 = a + 5 * 200
a = 5000 - 1000
a = 4000

Hope this helps