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 
Pvalue 
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
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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