A Marketing Analyst Wants to Examine the Relationship Between Sales

question 7

Multiple Choice

A marketing analyst wants to examine the relationship between sales (in $1,000s) and advertising (in $100s) for firms in the food and beverage industry and collects monthly data for 25 firms. He estimates the model: Sales = β₀ + β₁ Advertising + ε. The following table shows a portion of the regression results. Which of the following are the competing hypotheses used to test whether the slope coefficient differs from 3?

• A) H₀: b₁ = 3; H_A: b₁ ≠ 3
• B) H₀: b₁ = 2.88; H_A: b₁ ≠ 2.88
• C) H₀: β₁ = 3; H_A: β₁ ≠ 3
• D) H₀: β₁ = 2.88; H_A: β₁ ≠ 2.88

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Definitions:

WARP

Weak Axiom of Revealed Preference, a theory in economics that assumes if a consumer prefers product A over B when both are available, then they will not choose B when A is available.

Bundle

An assortment of items or services combined and offered for sale as a complete set.

Laspeyres Price Index

A measure of inflation computed by taking the ratio of the total cost of purchasing a specified basket of goods at current prices to the cost of those same goods at base-year prices.

Base Year

A base year is a specific year against which economic or financial data are measured and compared. It often serves as a reference point for calculating indexes and growth rates.