Question

A business is evaluating their advertising budget, and wishes to determine the relationship between advertising dollars spent and changes in revenue. Below is the output from their regression.

SUMMARY OUTPUT

Regression Statistics

Multiple R	0.95
R Square	0.90
Adjusted R Square	0.82
Standard Error	0.82
Observations	8
ANOVA
	df	SS	MS	F	Significance F
Regression	3	23.188	7.729	11.505	0.020
Residual	4	2.687	0.672
Total	7	25.875
	Coefficients	Std Error	t Stat	P-value	Lower 95%	Upper 95%
Intercept	83.91	2.03	41.36	0.00	78.28	89.54
TV ($k)	1.96	0.48	4.10	0.01	0.63	3.29
Radio ($k)	0.76	0.47	1.64	0.18	-0.53	2.05
Newspaper ($k)	1.76	1.93	0.91	0.41	-3.60	7.11

What advertising method provides the most additional revenue per dollar spent?

Select one:

a. Multiple R

b. TV

c. Radio

d. Newspaper

e. Regression

f. Residual

Answer 1

Solution:

Here we have to find the advertising method provides the most additional revenue per dollar spent?

Here we know that the multiple linear regression is like

Y = a + b1 * x1 + b2 * x2 + b3 * x3

If there are three variables

Where b1 : additional revenue per dollar spent by TV

b2 : additional revenue per dollar spent by rafir

b3 : additional revenue per dollar spent by newspaper

The most affect on factor on revenue is b1 because coefficient of x1( i.e. b1 = 1.96 ) is more than others

Therefore option TV is correct

Answer: b. TV

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