The manufacturer of a light fixture believes that the dollars spent on advertisi
ID: 2932490 • Letter: T
Question
The manufacturer of a light fixture believes that the dollars spent on advertising, the price of the fixture and the number of retail stores selling the fixture in a particular month influence the light fixture sales. The manufacturer randomly selects 10 months and performs a regression analysis - part of the output appears below. The sales are in thousands of units per month, the advertising is given in hundreds of dollars per month, the price is the unit retail price in a given month.
Predictor Constant idvertising Price Storea Coef 30.992 0.8202 -0.32502 1.841 StDev 7.728 0.5023 0.08935 3.855 4.01 1.63 -3.64 .48 0.007 0.154 0.011 0.650 S5.465 R-Sq96.75 R-Sq(adj) -9S.04 Analya1a of Variance Source Regression Residual Error DF 5179.2 179.2 1726.4 29.9 57.81 0.000 What is the best interpretation of the coefficient of advertising? Be VERY careful with the units!! For every $1000 in sales each month we expect advertising to increase by $820.20 on average, everything else being constant. For every $100 spent in advertising in a month we expect sales of the light fixture to increase by 820.2 fixtures on average, everything else being constant. OFor every $100 in sales each month we expect advertising to increase by $820.20 on average, everything else being constant. For every $100 spent in advertising in a month we expect sales of the light fixture to increase by 0.8202 fixtures on average, everything else being constant.Explanation / Answer
Here we are given that, the sales are in thousands of units per month, the advertising is given in hundreds of dollars per month, the price is the unit retail price in a given month
The coefficient for the variable Advertising is 0.8202. Therefore for every unit increase in Advertising, the increase in sales would be 1000*0.8202 / 100 = 8.202
which means for every $100 increase in expenditure of advertising, there would be an increase in sales by 820.2
Therefore b is the correct answer here.
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