# A chain restaurant that specializes in selling hamburgers wants to analyze how y = sales

__QUESTION:__

A chain restaurant that specializes in selling hamburgers wants to analyze how y = sales for a customer (the total amount spent by a customer on food and drinks, in dollars) depends on the location of the restaurant, which is classified as inner city, suburbia, or at an interstate exit.

a. Construct indicator variables x_{1} for inner-city and x_{2} for suburbia so you can include location in a regression equation for predicting the sales.

b. For part a, suppose ŷ = 5.8 – 0.7x_{1} + 1.2x_{2}. Find the difference between the estimated mean sales in suburbia and at interstate exits.

__ANSWER:__

a. x_{1} = 1 if inner city; 0 if other; x_{2} = 1 if suburbia; 0 if other

b. Suburbia: ŷ = 5.8 – 0.7(0) + 1.2(1) = 7.0; interstate exits: ŷ = 5.8 – 0.7(0) + 1.2(0) = 5.8 Interstate exit restaurants have predicted sales of $1.20 less than suburban restaurants.

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