In simple regression the dependent variable Y was assumed to be linearly related to a single variable X. In real life, however, we often find that a dependent variable may depend on more than one independent variable. A simple example is the idea of profit. The profit of a company would depend upon a number of revenues and costs. Hence, the simple regression equation appears to be inadequate in representing such a situation.

In general the multiple regression equation is

=

A + B1X1 + B2X2 + B3X3 + ----- + BnXk

where there are k independent variables X₁, X₂,---- X_k.

We can also write the equation as    = A + B₁x₁ + B₂x₂ + .... + B_nx_k + Ε