The owner of Showtime Movie Theaters, Inc., would like to predict weekly gross revenue as a function of advertising expenditures. Historical data for a sample of eight weeks follow.
Weekly Gross Revenue ($1000s): 96, 90, 95, 92, 95, 94, 94, 94
Television Advertising ($1000s): 5.0, 2.0, 4.0, 2.5, 3.0, 3.5, 2.5, 3.0
Newspaper Advertising ($1000s): 1.5, 2.0, 1.5, 2.5, 3.3, 2.3, 4.2, 2.5
a. Use α = 0.05 to test the hypotheses H0: β1 = β2 = 0 and Ha: β1 and/or β2 is not equal to zero for the model y = β0 + β1x1 + β2x2 + ε, where x1 = television advertising and x2 = newspaper advertising.
Compute the F test statistic (to 2 decimals).
What is the p-value?
- Select your answer - less than 0.01, between 0.01 and 0.025, between 0.025 and 0.05, between 0.05 and 0.10, greater than 0.10
What is your conclusion?
The overall model is - Select your answer - not significant, significant
b. Use α = 0.05 to test the significance of β1. Compute the t test statistic (to 2 decimals).
What is the p-value?
- Select your answer - less than 0.01, between 0.01 and 0.02, between 0.02 and 0.05, between 0.05 and 0.10, between 0.10 and 0.20, between 0.20 and 0.40, greater than 0.40
What is your conclusion?
- Select your answer - No significant, Significant relationship between television advertising and revenue
Should x1 be dropped from the model?
- Select your answer - No, x1 should not be dropped from the model, Yes, x1 should be dropped from the model
c. Use α = 0.05 to test the significance of β2. Compute the t test statistic (to 2 decimals).
What is the p-value?
- Select your answer - less than 0.01, between 0.01 and 0.02, between 0.02 and 0.05, between 0.05 and 0.10, between 0.10 and 0.20, between 0.20 and 0.40, greater than 0.40
What is your conclusion?
- Select your answer - No significant, Significant relationship between newspaper advertising and revenue
Should x2 be dropped from the model?
- Select your answer - No, x2 should not be dropped from the model, Yes, x2 should be dropped from the model
