A Two-Factor Analysis of Variance Is Conducted to Test the Effect

question 18

Multiple Choice

A two-factor analysis of variance is conducted to test the effect that price and advertising have on sales of a particular brand of bottled water.Each week a combination of particular levels of price and advertising are used and the sales amount is recorded.The computer results are shown below. ANOVA
Based on the results above and a 0.05 level of significance,which of the following is correct?

• A)There is no interaction between price and advertising,so results for individual factors may be misleading.
• B)There is interaction between price and advertising,so the above results for individual factors may be misleading.
• C)There is no interaction between price and advertising,and both factors significantly affect sales.
• D)There is interaction between price and advertising,so the above results conclusively show that both factors affect price.

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Definitions:

Herfindahl Index

A measure of the size of firms in relation to the industry and an indicator of the competition level among them.

Dominant Strategy

In a strategic interaction (game) between two or more players, a course of action (strategy) that a player will wish to undertake no matter what the other players choose to do.

Nash Equilibrium

A concept within game theory where no player can benefit by changing strategies while the other players keep theirs unchanged.

First-Mover Advantages

Competitive benefits that accrue to the initial entrant into a market, including brand recognition and product loyalty before competitors enter.