Question #60200

Use the data in the following table to answer the questions at the end of this Part 1.

Market segment Sales (‘000 units) Advertising

expenditure

(RM’000) Selling Price

(RM per unit) Disposable

Income

(RM’000)

1 160 150 15.00 19.0

2 220 160 13.50 17.5

3 140 50 16.50 14.0

4 190 190 14.50 21.0

5 130 90 17.00 15.5

6 160 60 16.00 14.5

7 200 140 13.00 21.5

8 150 110 18.00 18.0

9 210 200 12.00 18.5

10 190 100 15.50 20.0

a) Add advertising expenditure as another independent variable and regress sales on selling price, disposable income and advertising expenditure.

I. What is the estimated regression equation? II. How “good” is the estimated model?

III. Discuss the implication of the results of the estimated regression equation.

Market segment Sales (‘000 units) Advertising

expenditure

(RM’000) Selling Price

(RM per unit) Disposable

Income

(RM’000)

1 160 150 15.00 19.0

2 220 160 13.50 17.5

3 140 50 16.50 14.0

4 190 190 14.50 21.0

5 130 90 17.00 15.5

6 160 60 16.00 14.5

7 200 140 13.00 21.5

8 150 110 18.00 18.0

9 210 200 12.00 18.5

10 190 100 15.50 20.0

a) Add advertising expenditure as another independent variable and regress sales on selling price, disposable income and advertising expenditure.

I. What is the estimated regression equation? II. How “good” is the estimated model?

III. Discuss the implication of the results of the estimated regression equation.

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