Question

Do movies of different types have different rates of return on their budgets? Here is a regression of US Gross ($M) on Budget ($M) and with an indicator variable Comedy that is 1 for comedies and 0 for adventure films.

Dependent variable is: US Gross ($M)

variable	Coefficient	SE(Coeff)	t-ratio	P-value	R-squared = 41.8%
Constant	-13.9288	30.51	-0.457	0.6497	R-squared (adjusted) = 37.0%
Budget ($M)	1.43487	0.3967	3.62	0.0007	s = 57.94
Budget*Comedy	-0.616027	The 0.4009	-1.54	0.1300	49 degrees of freedom
Comedy	34.1453	33.15	1.03	0.3081

1. i) Interpret the coefficient of Comedy.

2. ii) Interpret the coefficient of Budget * Comedy

iii) Is the interaction effect of Budget and Comedy significant?

Use α = 0.05. Explain.

Answer 1