Question

A retail analyst builds a regression model to forecast next quarter's sales for a single new store based on square footage. Management asks for a range that captures where that specific store's actual sales are likely to fall, not just the average sales of all stores of that size. Which interval should the analyst report, and why?

Accepted Answer

A prediction interval, because it accounts for both the uncertainty in the estimated mean and the variability of individual observations around that mean

Answer

A confidence interval, because it always produces a wider range that better protects against error for a single store

Answer

A confidence interval, because it estimates the range for an individual outcome rather than the average

Answer

A prediction interval, because it narrows the range by ignoring the residual variability of individual data points