SCENARIO 17-4 The Regression Tree Below Was Obtained for Predicting the Weekend

question 37

True/False

SCENARIO 17-4
The regression tree below was obtained for predicting the weekend box office revenue of a newly
released movie (in thousands of dollars)based on data collected in different cities on the expenditure
(at $25, $30, $35, $40, $45, $50, $55, $60, $65 or $70 thousand)spent on TV advertising and the
number of times (10, 15, 20, 25, 30 or 35)a day the advertisement appear on TV.
Business Analytics 17-15
-True or False: Referring to Scenario 17-4, the highest mean weekend box office revenue is
predicted to occur with at least $45 thousand spent on TV advertisement and fewer than 25
advertisement appearances a day.

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Definitions:

Decision Usefulness

The quality of financial information that makes it valuable for users in making informed decisions.

Revenue Recognition

The accounting principle that determines the specific conditions under which revenue is recognized as earned.

Economic Reality

The concept that financial statements and actions should reflect the true economic substance of business transactions rather than just their legal form.

Realizability

The ability or likelihood of an asset to be converted into cash or an asset expected to bring cash inflows through revenue.