A Regression Analysis Between Sales (Y in $1000) and Advertising

question 126

Multiple Choice

A regression analysis between sales (y in $1000) and advertising (x in dollars) resulted in the following equation: ​ = 30,000 + 5x
​
The above equation implies that an

• A) increase of $4 in advertising is associated with an increase of $5000 in sales.
• B) increase of $1 in advertising is associated with an increase of $5 in sales.
• C) increase of $1 in advertising is associated with an increase of $34,000 in sales.
• D) increase of $1 in advertising is associated with an increase of $5000 in sales.

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Definitions:

Work in Process

Inventory that includes goods in production but not yet completed, a stage between raw materials and finished goods.

Equity

Equity refers to the ownership interest in a company of its shareholders, representing the residual assets of the company after deducting liabilities.

Dividends Paid

The portion of a company's earnings that is distributed to shareholders.

Retained Earnings

The portion of net income not distributed as dividends to shareholders but reinvested in the company or kept as reserve.