An analyst prepared the following regression model: ? = 2000 + 50 x 1 + 0.1 x 2

Question

An analyst prepared the following regression model:
? = 2000 + 50x1 + 0.1x2

where y = daily sales, x1 = months since the beginning of the year, and x2 = advertising expense.
Which of the following would the model predict?

Spending an extra $1000 on advertising in a later month would increase daily sales by more than it would in an earlier month. Spending an extra $1000 on advertising in a later month would increase daily sales by less than it would in an earlier month. Spending an extra $1000 on advertising in a later month would increase daily sales by a higher percent than in an earlier month. Spending an extra $1000 on advertising in a later month would increase daily sales by a lower percent than in an earlier month.

Explanation / Answer

Option B is Correct

Spending an extra $1000 on advertising in a later month would increase daily sales by less than it would in an earlier month

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