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A marketing manager for a chain of hardware stores needed more information about the effectiveness of the four types of advertising that the chain used.

A marketing manager for a chain of hardware stores needed more information about the effectiveness of the four types of advertising that the chain used. The four advertising types are direct mailing, newspaper advertising, radio advertising, and television commercials. Data in the file XR25-21, posted on Isaak, contain the weekly gross sales, and advertising expenditures for the four types of advertising. All values are in thousands of dollars. a) Determine the regression equation. Clearly state the regression equation. (2 Marks) b) What is the coefficient of determination and what does it tell you about the model? (5 Marks) c) Test the validity of the model. Explicitly specify the null and alternative hypotheses, and the reasons for either accepting or rejecting the null hypothesis. (5 Marks) d) Are there signs of the presence of multicollinearity? Show and explain. (3 Marks) e) Should any of the independent variables be removed from the model at = 0.05 ? Why or why not? Explain your answer. (5 Marks)

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