An marketing analyst wants to examine the relationship between sales (in $1,000s)and advertising (in $100s)for firms in the food and beverage industry and collects monthly data for 25 firms.He estimates the model: Sales= β₀ +β₁ Advertising + ε.The following ANOVA table below shows a portion of the regression results. Which of the following is the prediction of Sales for a firm with Advertising of $500? A) $1,480 B) $40,100 C) $54,500 D) $148,000

Question

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From the ANOVA table, we can see that the estimated regression equation is Sales = 54.5 + 148*₁ Advertising. Plugging in Advertising = 500 (in $100s), we get Sales = 54.5 + 148*5 = $767.5 (in $1,000s). Multiplying by 1,000, we get Sales = $54,500.

An Marketing Analyst Wants to Examine the Relationship Between Sales