When a Regression Model Was Developed Relating Sales (Y) of a Company

question 29

Essay

When a regression model was developed relating sales (Y) of a company to its product's price (X₁), the SSE was determined to be 495. A second regression model relating sales (Y) to product's price (X₁) and competitor's product price (X₂) resulted in an SSE of 396. At $\alpha$ = 0.05, determine if the competitor's product's price contributed significantly to the model. The sample size for both models was 33.

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Definitions:

Marginal Cost

The change in the total expense associated with the production of an extra unit of a product, whether it be an increase or decrease.

Average Total Cost

The total cost of production divided by the number of goods produced, representing the average cost per unit of output.

Average Total Cost

The total cost of production (fixed plus variable costs) divided by the number of units produced, representing the per-unit production cost.

Marginal Cost

The monetary cost of generating one additional unit of a product or service.