Question

A consumer products company wants to measure the effectiveness of different types of advertising media in the promotion of its products. Specially, two types of advertising media are to be considered: radio and television advertising and newspaper advertising (including the cost of discount coupons).  A sample of 22 cities with approximately equal population is selected for study during a test period of one month.  Each city is allocated a specific expenditure level both for radio and television advertising and for newspaper advertising.  The sales of the product (in thousands of dollars) and also the levels of media expenditure (in thousands of dollars) during the test month are recorded with the following results.

Sales	Radio	Newspaper
973	0	40
1119	0	40
875	25	25
625	25	25
910	30	30
971	30	30
931	35	35
1177	35	35
882	40	25
982	40	25
1628	45	45
1577	45	45
1044	50	0
914	50	0
1329	55	25
1330	55	25
1405	60	30
1436	60	30
1521	65	35
1741	65	35
1866	70	40
1717	70	40

a)    State the multiple regression equation.

b)    Interpret the coefficient b1 and b2 and interpret bo

c)   Predict the average sales for a city in which radio and television advertising is $20,000 and newspaper advertising is $20,000.

d)   Interpret the coefficient of multiple determination and state how well the equation predicts based on it.

e)    State whether there is a significant relationship between sales and the two explanatory variables (radio advertising and newspaper advertising) at the .05 level of significance, and state how you determined whether the relationship is significant. You do not need to do the six steps.

f) At the .05 level of significance, determine whether each variable makes a significant contribution to the regression model. State how you determined this, and based on the results, indicate the independent variables that should be included in the model.

Answer 1