Use computer software packages, such as Minitab or Excel, to solve this problem.

Question

Use computer software packages, such as Minitab or Excel, to solve this problem. The owner of Showtime Movie Theaters, Inc., would like to predict weekly gross revenue as a function of advertising expenditures. Historical data for a sample of eight weeks follovw Weekly Gross Revenue ($1,000s) Television Advertising ($1,000s) 5.0 2.0 4.0 2.5 3.0 3.5 2.5 3.0 Newspaper ($1,000s) 90 95 92 96 94 94 103 2.0 1.5 2.5 3.3 2.3 4.2 2.5 a. Develop an estimated regression equation with the amount of television advertising as the independent variable (to 1 decimal) Revenue VAdv Develop an estimated regression equation with both television advertising and newspaper advertising as the independent variables to 2 decimals). Revenue = VAdv + cIs the estimated regression equation coefficient for television advertising expenditures the same in part (a) and in part (b)? No, the coefficients are not the sameO d. Predict weekly gross revenue for a week when $3.4 thousand is spent on television advertising and $1.8 thousand is spent on newspaper advertising?

Explanation / Answer

The statistical software output for this problem is:

Multiple linear regression results:
Dependent Variable: Revenue
Independent Variable(s): Tel. Ad
Revenue = 89.275362 + 1.8743961 Tel. Ad

Parameter estimates:

Analysis of variance table for multiple regression model:

Summary of fit:
Root MSE: 3.8029144
R-squared: 0.2076
R-squared (adjusted): 0.0755

Hence,

a) Regression equation is:

Revenue = 89.3 + 1.9 TV/Adv

b) Regression equation is:

Revenue = 83.8 + 2.6 TV/Adv + 1.3 NewsAdv

c) TV/Adv = 3.4, NewsAdv = 1.8

Hence,

Revenue = 83.8 + 2.6*3.4 + 1.3*1.8

Revenue = $ 94.98 in thousands

Parameter Estimate Std. Err. Alternative DF T-Stat P-value Tel. Ad 1.8743961 1.4952244 0 6 1.2535885 0.2566 Intercept 89.275362 4.952049 0 6 18.027964 <0.0001

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