A Retailer, in Business for Over 50 Years, Has Developed

question 90

Multiple Choice

A retailer, in business for over 50 years, has developed the following regression model from the past 60 months of operating data:
Monthly sales dollars = $50,000 + $4.70A + $30B − $1,000X
Where:
A = number of customers
B = advertising dollars per month
X = 1 if a winter month
X = 0 if other months
An appropriate interpretation of this model is that:

• A) The business is seasonal, generating higher sales in winter months than other months.
• B) Advertising is not cost effective.
• C) Within the relevant range, each additional customer will make an average purchase of $4.70 per month.
• D) Sales are always expected to be at least $50,000.

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