Selling price and amount spent advertising were entered into a multiple regression to determine what affects flat panel LCD TV sales. The regression coefficient for Advertising was found to be +3.0926, which of the following is the correct Interpretation for this value?
A) While price negatively affects the number of Sony Bravia LCD TV's sold, an Increase in the amount of money spent on advertising will result in at least 3 Additional TV's sold.
B) At a given price, increasing the amount spent on advertising the Sony Bravia over The previous quarter will increase sales by 3.0926 units, on average.
C) A one percent increase in the amount spent on advertising the Sony Bravia over
The previous quarter will increase sales by 3.0926 units, on average.
D) At a given price, a one percent increase in the amount spent on advertising the Sony Bravia over the previous quarter is associated with an increase in sales of 3.0926 units, on average.
E) None of the above.2.2 Interpret the coefficients of a multiple regression model.

Question

Quizplus · Accepted Answer

The coefficient for Advertising indicates the effect of a change in advertising spending on sales, while controlling for the effect of price. Specifically, option D correctly interprets the coefficient as indicating that a one percent increase in advertising spending is associated with an average increase in sales of 3.0926 units, controlling for price. Option A incorrectly states that price has a negative effect on sales, which is not indicated by the information given. Option B incorrectly suggests that the interpretation applies only to changes within a given quarter, which is not supported by the information given. Option C includes the incorrect phrase "over the previous quarter," which is not relevant to the interpretation of the coefficient.

Selling Price and Amount Spent Advertising Were Entered into a Multiple