Question

The owner of Showtime Movie Theaters, tInc., would like to predict weekly gross revenue as a function of advertising expenditures. Historical data for a sample of eight weeks follow has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. Open spreadsheet a. Use a .01 to test the hypotheses for the model y fo+ +P2 t, where: Ho: -2-0 Hai 1 and/or h #0 Compute the F test statistic (to 2 decimals). What is the p-value? What is your conclusion? b. Use a .05 to test the significance of . Compute the t test statistic (to 2 decimals). What is the p-value? What is your conclusion?

Answer 1

Solution:

We can use the excel regression data analysis tool to answer the given questions. The excel output is given below:

SUMMARY OUTPUT
Regression Statistics
Multiple R	0.9790
R Square	0.9584
Adjusted R Square	0.9418
Standard Error	0.4952
Observations	8
ANOVA
	df	SS	MS	F	Significance F
Regression	2	28.2738	14.1369	57.6443	0.0004
Residual	5	1.2262	0.2452
Total	7	29.5
	Coefficients	Standard Error	t Stat	P-value	Lower 95%	Upper 95%
Intercept	85.4470	1.0506	81.3323	0.0000	82.7464	88.1477
Television Advertising ($1000s)	1.7101	0.1610	10.6249	0.0001	1.2963	2.1238
Newspaper Advertising ($1000s)	1.0089	0.2404	4.1974	0.0085	0.3910	1.6268

.01 to test the hypotheses for the model y = lo + 11 + 1242 + E, where: 81 = P2 = 0 Hy: A and/or 12 #0 We can answer these question using the above excel output as: Compute the F test statistic (to 2 decimals). 57.64 What is the p-value? Less than 0.01 What is your conclusion? The regression equation is significant b. Use .05 to test the significance of Compute the t test statistic (to 2 decimals). 10.62 What is the p-value? less than 0.01 D What is your conclusion? Significant relationship between television advertising and revenue Should X1 be dropped from the model? No c. Use a - .05 to test the significance of Az. Compute the t test statistic (to 2 decimals). 4.20 What is the p-value? less than 0.010 What is your conclusion? Significant relationship between newspaper advertising and revenue Should az be dropped from the model? No d. The owner plans to spend (in $1000) $5.3 on television advertising and $3.5 on newspaper advertising. What is the expected revenue (in S1000) for this advertising combination (to the nearest whole number)? D = 85.4470+(1.7101x5.3)+(1.0089+3.5) $ 98 =98.0498