on boutique in Wiliamstown, MA hired a statistician who devnding to ammu w estim
ID: 3062457 • Letter: O
Question
on boutique in Wiliamstown, MA hired a statistician who devnding to ammu w estimated regression relating investment All variables are expressed in $1,000. PLEASE EXPLAIN AND SHOW ALLY TO RECEIVE FULL CREDIT. statistician who developed the and pending to annual sales. Sales = 50 + 10. investment spending +20. advertisement spending YOUR WORK t sales resulting from a $ 15,000 investment spending and $10,000 a. spending advertisement Provide the accurate interpretation of the estimated coefficients associated with investment spending and advertisement spending, respectively. b.1 Interpretation of the estimated coefficient associated with investment spending b. b.2. Interpretation of the estimated coefficiet associated with advertisement spendi Suppose that the CEO of this fashion boutique asks you to guide her decision to increase sales. What will be your advice based on the estimate results of this model? Please motivate your proposed spending c. Sales 50+ 10 investment spending + 20 advertisement spendingExplanation / Answer
The given equation is
sales = 50+10*investment spending +20* advertisement spending
a) investment spending= $ 15,000 and advertisement spending = $10,000
sales= 50+ 10*15000+20*10000
= 50+ 150000+200000
sales = 350050
b(i) interpretation of estimated coefficient associated with investment spending
If advertisement spending is fixed, then for each change of 1 unit in investment spending , sales changes 10 units.
b(ii) interpretation of estimated coefficient associated with advertisement spending
If investment spending is fixed, then for each change of 1 unit in advertisement spending , sales changes 20 units.
c) To increase sales of the boutique, CEO should do more investment in advertisement as compared to other investment.
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