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.

Distinguish between positive and normative economic statements.

Know the steps of the scientific method in economics.

Understand that economic models require simplifications due to the complexity of reality.

Identify the characteristics of a good economic theory.

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Definitions:

Statistical Control Chart

A tool used in statistical quality control to monitor, control, and improve the process quality by plotting data points over time and determining whether they fall within a specified control limit.

Labour Efficiency Variance

The deviation in actual labor usage compared to what was expected or budgeted, impacting the cost-efficiency and profitability of production.

Critical Values

Specific points on the scale of a test statistic that determine the threshold for rejecting the null hypothesis.

Material Price Variance

The difference between the actual cost of materials used in production and the expected cost based on standard pricing.