You have constructed the following regression tree predicting unit sales (in thousands) of car seats. The variable ShelveLoc has possible values Good, Medium, and Bad.

Variable	Observed Value
ShelveLoc	Good
Price	120
Age	57
Advertising	12

Determine the predicted unit sales (in thousands) for the above observation based on the regression tree.

• 4.7
• 6.6
• 7.4
• 9.2
• 9.4

Copyright 2023. The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.

Key: D

For the first split, ShelveLoc = Good, the answer is no, and the branch to the right is taken.

For the second split, Price = 120 ≥ 110, the answer is yes, and the branch to the left is taken. The node has a predicted value of 9.2.

Copyright 2023. The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.