Question

Exhibit 15-2A regression model between sales (y in $1000s), unit price (x1 in dollars) and television advertisement (x2 in dollars) resulted in the following function:ŷ = 7 − 3x1 + 5x2For this model, SSR = 3500, SSE = 1500, and the sample size is 18.The coefficient of x2 indicates that if television advertising is increased by $1 (holding the unit price constant), sales are expected to _____.

Answer 1

Answer:

Sales are expected to increase positively.

Step-by-step explanation:

The model is y =7-3*X1+5*X2

Here, y is the depended variable and X1 and X2 are independent variable.  

Holding the unit price constant X2 (television advertisement) is increase by $1 dollar

SSR= 3500

SSE=1500

So, TSS = SSR+SSE = (3500+1500) = 5000

Now r^2= 1 - (SSR/TSS) = 1 - (3,500/5,000) = 1 - 0.70 = 0.30

So, the sample correlation coefficient (r) = (0.3)^(1/2) = 0.547

We can conclude that sample correlation indicates a strong positive relationship.