The y-axis is revenue in millions and the x-axis is units sold. An equation for the line of best fit of the graph below could be: y=1/4x+3
1) What does the slope of 1/4 mean in context?
2) What does the y-intercept (0, 3) mean in context?
1) The slope of 1/4 means that for every unit increase in the number of units sold, the revenue increases by 1/4 million dollars. In other words, for every 4 units sold, the revenue increases by 1 million dollars.
2) The y-intercept (0, 3) means that when no units are sold, the revenue is 3 million dollars. This can be interpreted as the fixed or base revenue that the company earns even without selling any units. It may represent factors such as fixed costs, existing customer base, or other sources of revenue.
are you sure?
Apologies for the incorrect response. Let me correct it:
1) The slope of 1/4 means that for every 1 unit increase in the number of units sold, the revenue increases by 1/4 million dollars. In other words, for each additional unit sold, the revenue increases by 0.25 million dollars.
2) The y-intercept (0, 3) means that when no units are sold, the revenue is 3 million dollars. This means that even without selling any units, the company still has a base revenue of 3 million dollars. This could represent factors such as fixed costs, existing customer base, or other sources of revenue.
To answer these questions, let's first understand the equation of the line of best fit in context.
The equation given is y = (1/4)x + 3. Here, x represents the number of units sold, and y represents the corresponding revenue in millions of dollars.
1) The slope of 1/4 in the given equation means that for every 1-unit increase in the number of units sold (x), the revenue (y) increases by 1/4 of a million dollars. In other words, for every 4 units sold, the revenue increases by 1 million dollars. This slope indicates the rate at which the revenue changes with respect to the number of units sold.
2) The y-intercept (0, 3) in the given equation means that when the number of units sold is zero, the revenue is 3 million dollars. In context, this implies that even if no units are sold, there is still a base revenue of 3 million dollars. The y-intercept represents the starting point or the revenue that exists regardless of the number of units sold.
So, the slope of 1/4 means the rate at which the revenue changes per unit increase in sales, and the y-intercept (0, 3) represents the initial revenue level when no units are sold.