(20 points) Consider the following equation relating dollars spent on soft drink

Question

(20 points) Consider the following equation relating dollars spent on soft drink
advertising by a company to dollars of sales of its product in a quarter:
Sales = 2,326,000,000 + 1.25 advertising - 0.00000000000004 advertising2
(429,000,000)              (0.432)                       (0.0000000000000015)
n = 36, R2= 0.1988
Here sales represents dollars sales of the product and advertising represents dollars
spent on advertising.
Note: There are 13 zeroes after the decimal place and before the 4 in the advertising^2
coefficient. There are 14 zeroes after the decimal place and before the 1 in its standard
error term.

1.Define advbil as spending on advertisment in millions of dollars and rewrite the
estimated equation with advbil and advbil2
as the independent variables, i.e.
advbil = advertising/1,000,000.

Explanation / Answer

advbil = 1.25 / 1,000,000 = 0.00000125

advbil ^2 = 0.00000000000004 / 1,000,000 = 4x10^-20

interception = 2,326,000,000 / 1,000,000 = 2326

sales = 2326 + 0.00000125 advbil - 4x10^-20 advbil ^2

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