Regression Analysis: Sales versus Price, Promotion The regression equation is Sa

Question

Regression Analysis: Sales versus Price, Promotion

The regression equation is

Sales = 12.9 - 6.50 Price + 0.0207 Promotion

Predictor     Coef SE Coef       T      P VIF

Constant   12.8638   0.2425   53.05 0.000

Price -6.4979   0.3575 -18.18 0.000 1.159

Promotion 0.02069 0.03811 0.54 0.611 1.159

S = 0.156325   R-Sq = 98.7%   R-Sq(adj) = 98.2%

For the above multiple regression model---

Select one:

a. Collinearity is a problem because VIF < 5

b. Collinearity is not a problem because VIF < 5

c. Collinearity is not a problem because R-Sq(adj) = 98.2%

d. Collinearity is a problem because R-Sq(adj) = 98.2%

Explanation / Answer

Predictor     Coef SE Coef       T      P VIF

Constant   12.8638   0.2425   53.05 0.000

Price -6.4979   0.3575 -18.18 0.000 1.159

Promotion 0.02069 0.03811 0.54 0.611 1.159

For the above multiple regression model---

ans) b. Collinearity is not a problem because VIF < 5

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