Question

Consider this regression equation: revenues = b0 + b1(ad spending) + Error Which is most likely to be false?

Select one:

a. If the slope of b1 is positive, then ad spending goes up as revenues increase.

b. If the slope of b1 is 0, then ad spending does not increase or decrease as revenues increase.

c. If the slope of b1 is negative, then ad spending goes down as revenues decrease.

d. If the slope of b1 is 0, then ad spending is unrelated to revenues.

Consider: sales = 37.69 + 1.23 * TVads. If you spend $2387 on TV advertising, your best guess at sales is ______.

Select one:

a. Closer to $3000

b. Closer to $2000

c. Over $4000

d. Closer to $1000

Consider: sales = 37.69 + 1.23 * TVads. Which of the following is the correct interpretation?

Select one:

a. For every extra $1.23 spent on TV ads, the predicted sales increase by $1

b. The average sale is $37.69

c. For every extra $1.23 spend on TV ads, the predicted sales increase by $37.69

d. Predicted sales increases by $1.23 for each extra dollar spend on TV ads

Consider: Revenues = 37.69 + 1.23 x marketing dollars spent

Suppose we have 10 data points whose values include the revenues gained when between $1000 and $5000 of marketing dollars were spent. What are the expected revenues when spending $0 on marketing?

Select one:

a. $0

b. $1,223.00

c. $37.69

d. None of the other answers.

Consider: Revenues = 37.69 + 1.23 x marketing dollars spent

Suppose we have 2000 data points whose values include the revenues gained when between $1000 and $5000 of marketing dollars were spent. Which of the following is true about expected revenues when spending $1000 on marketing?

Select one:

a. Spending $1000 on marketing is related to revenues of $2535.38.

b. Spending $1000 on marketing will cause revenues to be $2535.38.

c. Spending $1000 on marketing will cause revenues to be $1,223.00.

d. Spending $1000 on marketing is related to revenues of $1,267.69.

Answer 1

1) If b₁ is negative then revenue increases as spending decreases, because it has a negative slope. the correct option is (c).

2) Given equation Sales = 37.69+1.23*TVads

For a given $2387 spending on TVads Sales will be = 37.69+1.23*2387 = 2973.7

Which is closer to $3000.

3) Sales = 37.69+1.23TVads indicates that for every $1 spent on TVads there will be 1.23 times increment in revenues.

4) The expected revenues when $0 spending on marketing implies the expected revenue will be equal to $37.69

5) The expected revenues when $1000 spending on marketing implies the expected revenue will be equal to = 37.69 + 1000*1.23 = $1267.69