FINAL PAPER

NAME: RIMSHA ALAM

SEMESTER: 2ND

SECTION: D

SUBJECT: BUSINESS STATISTICS

TEACHER: MOMINA NADEEM

QUESTION NO:1

Describe the applications of Index numbers and regression technique in business i.e. how these tools
can be used in the business world.

ANSWER:

INDEX NUMBER TECHNIQUE IN BUSINESS:

An index number is a tool that we generally use to measure the difference in relative changes from time
to time. The difference can also be from place to place.

Index numbers are used to measure changes in the value of money. A study of the rise or fall in the
value of money is essential for determining the direction of products and employment to facilitate
future payments and know changes in the real income of different groups of people at different groups
of people at different places and time.

Index numbers are used to measure all types of agricultural, industrial, and commercial fields, and also
such as income, export, import, and prices etc.

REGRESSION USE IN BUSINESS:

Regression is a statistical tool used to understand and quantify the relation between two or more
variables. The two primary uses for regression in business are forecasting and optimization.

Regression is often used to determine how many specific factors such as the price of a commodity,
interest rate, particular industries, or price movement of an assets.

In general regression analysis identifies relationship based on independent and dependent variable. For
example a dependent variable is your company’s sales and an independent variable may be interest
rate. Regression analysis measures the strength or correlation between the dependent and independent
variable.

Suppose you have a lemonade business. A simple linear regression real life example could mean you
finding a relationship between revenue and temperature, with a sample size for revenue as the
dependent variable. Thus, regression analysis can analyze the impact of varied factors on business sale
and profits.