A Marketing Analyst Wants to Examine the Relationship Between Sales

question 74

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 so 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 Advertising is significant in predicting Sales?

• A) H₀:b₁ = 0;H_A:b₁ ≠ 0.
• B) H₀:b₁ = 2.88;H_A:b₁ ≠ 2.88.
• C) H₀:β₁ = 0;H_A:β₁ ≠ 0
• D) H₀:β₁ = 0;H_A:β₁ ≠ 0.

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Definitions:

Sunk Costs

Sunk costs refer to expenses that have already been incurred and cannot be recovered, and therefore should not affect future business decisions.

Opportunity Costs

The missed opportunity to benefit from different options when a single choice is made.

Economies of Scale

Cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale.

Diseconomies of Scale

The phenomenon where an increase in production leads to higher costs per unit due to inefficiencies that arise from scaling up operations.