## Question

You work for a company that’s selling electric cars to consumers. The company wants to get the maximum amount of value from its advertising dollars. So it wants to ramp up advertising when it thinks that customers would be most interested in purchasing an electric car. Your data science team wants to create a regression analysis based on fuel prices. How might this look on an XY diagram?

A. Put electric car sales on both the X and Y axis.

B. You don’t need to put anything on the Y axis; just put fuel prices on the X axis and the trendline.

C. Create a trendline with fuel prices along the X axis and electric car sales on the Y axis.

D. Put fuel prices in dollars on the X axis and fuel prices in rupees on the Y axis.

## Answer

C. Create a trendline with fuel prices along the X axis and electric car sales on the Y axis.

## Explanation

The correct answer is **C. Create a trendline with fuel prices along the X axis and electric car sales on the Y axis.**

To represent a regression analysis based on fuel prices and electric car sales on an XY diagram, you would typically plot the independent variable (fuel prices) on the X-axis and the dependent variable (electric car sales) on the Y-axis. Here’s a more detailed explanation:

- X-Axis: The X-axis represents the independent variable, which is fuel prices in this case. The fuel prices will be plotted along the X-axis to capture the range of fuel prices observed in the dataset. The X-axis values will increase from left to right, reflecting the increase in fuel prices.
- Y-Axis: The Y-axis represents the dependent variable, which is electric car sales. The electric car sales data will be plotted along the Y-axis. The Y-axis values will increase from bottom to top, representing increasing electric car sales.
- Data Points: Each data point will represent a specific combination of fuel prices and corresponding electric car sales. For example, if there are multiple instances where the fuel price is $2.50 per gallon, each instance’s corresponding electric car sales will be plotted on the Y-axis at the $2.50 mark on the X-axis.
- Trendline: In regression analysis, a trendline is often used to represent the relationship between the independent and dependent variables. The trendline shows the overall pattern or direction of the relationship. It provides an estimate of the trend in electric car sales based on changes in fuel prices.

By analyzing the XY diagram, you can observe the relationship between fuel prices and electric car sales. The trendline helps identify whether there is a positive or negative correlation between the two variables. For example, if the trendline slopes upward from left to right, it indicates that higher fuel prices are associated with increased electric car sales.

Option A, “Put electric car sales on both the X and Y axis,” is incorrect. Placing electric car sales on both axes would not provide the appropriate representation for regression analysis. It would essentially create a scatter plot of electric car sales against itself, which does not capture the relationship between fuel prices and electric car sales.

Option B, “You don’t need to put anything on the Y axis; just put fuel prices on the X axis and the trendline,” is also incorrect. The Y-axis is necessary to represent the dependent variable, which is electric car sales. The trendline alone cannot adequately convey the relationship between the two variables without the corresponding Y-axis values.

Option D, “Put fuel prices in dollars on the X axis and fuel prices in rupees on the Y axis,” is incorrect. It suggests using different units (dollars and rupees) to represent the same variable (fuel prices) on the X and Y axes, which would not accurately represent the relationship between fuel prices and electric car sales.

In summary, to represent the regression analysis based on fuel prices and electric car sales on an XY diagram, you would plot fuel prices along the X-axis and electric car sales along the Y-axis, creating a trendline that shows the relationship between the two variables.

## Reference

- Linear Regression A-Z (Using Car Price Prediction dataset) | by Abhishek Darekar | Analytics Vidhya | Medium
- Trends and developments in electric vehicle markets – Global EV Outlook 2021 – Analysis – IEA
- Electric Vehicles – Analysis – IEA
- 12.3 The Regression Equation – Introductory Statistics | OpenStax
- Data Analysis and Price Prediction of Electric Vehicles (analyticsvidhya.com)
- How to Use Regression Analysis to Forecast Sales: A Step-by-Step Guide (hubspot.com)
- Data Analysis and Price Prediction of Electric Vehicles (analyticsvidhya.com)
- Regression Analysis – Formulas, Explanation, Examples and Definitions (corporatefinanceinstitute.com)
- Simple Linear Regression | An Easy Introduction & Examples (scribbr.com)
- Energy Prices and Electric Vehicle Adoption (nber.org)
- Arnob – 2021 – Effect of electric vehicle sales on the price of oil.pdf (suny.edu)
- Are electric or gas-powered cars a better deal? EVs may win, experts say (cnbc.com)
- Low Gas Prices: The Double-Whammy Negative Impact on US EV Sales | EVAdoption

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