Even though insignificant explanatory variables can raise the adjusted R² of a demand function,one should not interpret their effects on the regression when A) testing marketing hypotheses about the determinants of demand B) analyzing inventory relative to capacity requirements C) forecasting unit sales for operations planning D) sales revenue reaches its peak E) planning for capital budgets

Question

Quizplus · Accepted Answer

When testing marketing hypotheses about the determinants of demand, it is important to interpret the effects of all explanatory variables, even those that may seem insignificant. This can help to identify potential factors that may be impacting demand and inform future marketing strategies. In other contexts such as analyzing inventory or planning for capital budgets, insignificant explanatory variables may not be as relevant.

Even Though Insignificant Explanatory Variables Can Raise the Adjusted R2

Even Though Insignificant Explanatory Variables Can Raise the Adjusted R²