EXAMINE THE CASE BELOW EXERCISE #1 UVI Bookstore Manager wants to assess the rel
ID: 375455 • Letter: E
Question
EXAMINE THE CASE BELOW EXERCISE #1 UVI Bookstore Manager wants to assess the relationship between the number of textbook copies sold and a number of possible determinants: (i) the number of pages in the book, (ii) the age of the author, (iii) the advertising expenditure made, and (vl) the number of similar books on the The proposed multiple regression model is thus as follows: Sales (#) -b, + bi Pages + b. Age + b , AdExR+ b. #Substitutes The table below shows the data. Competing Books (s) Author's Ad Expenses Coples Sold (1000s) Pages (number)Age 352 490 250 670 805 390 510 13 23 36 29 20 39 61 10 67 98 102 122 190 52 50 31 29 75 12 905 472 39 30 Using the computer output, respond to the following questions (requests): (a) What is the estimated multiple regression equation? (b) What sort of relationship exists between book sales and each of the independent variables? (c) Which of the independent variables are statistically significant and which ones are not? Use a level of significance a-0.05 (d) Interpret the estimated values for the multiple regression coefficients. (e) Give a point estimate of the expected sales of an 800-page book written by a 60-year old author, a $30,000 ad-campaign expenses and 8 competitive substitute books on the market. COMPUTER OUTPUT (RESULTSExplanation / Answer
a) Estimated multiple regression equation is: Sales (#) = -44.66162 + 0.001035 PAGES + 1.92107 AUTHOR/AGE + 3.151611 ADEXPENSES - 1.177071 SUBSTITUTS
b) Relationship between Sales (#) and PAGES, AUTHOR/AGE and ADEXPENSES is positively correlated. Sales increases as these variables increase.
Relationship between Sales (#) and SUBSTITUTS (Competing Books) is negatively correlated. Sales decreases as this variable increases.
c) p-value for PAGES is 0.988251 is the highest and greater than 0.05. Therefore, this variable is statistically Not significant. Other variables are significant.
d) PAGES is statistically insignificant, therefore it is discarded from the regression model. The revised regression equation is taken from the revised REGRESSION & ANOVA analysis (image 3)
Sales (#) = -44.31539 + 1.91761 AUTHOR/AGE + 3.16841 ADEXPENSES - 1.167417 SUBSTITUTS
interpretation of multiple regression coefficients: Coefficient of AUTHOR/AGE is 1.91761 , which means for every 1 year increase in AUTHOR/AGE, Sales (#) increases by 1.91761. Similarly for every $ 1000 increase in ADEXPENSES, Sales (#) increases by 3.16841, and decreases by 1.167417 for every unit increase in SUBSTITUTS (Competing books)
e) Point estimate of expected sales: Sales (#) = -44.31539 + 1.91761*60 + 3.16841*30 - 1.167417*8 = 156.45
So, estimate of copies sold (1000s) = 156.45
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