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Analysts at a digital marketing firm collected data on the firm's extent of website analysis (X), along with the cost per customer (C), and the
Analysts at a digital marketing firm collected data on the firm's extent of website analysis (X), along with the cost per customer (C), and the ad revenue per customer (R). Using regression analysis, the analysts produced the following two outputs: C regressed on X2 Coefficients Standard Error t-Statistic P-Value Lower95% Upper95% Intercept X2 0.739 0.103 2.498 0.008 0.296 12.958 0.768 1.7E-24 -4.208 0.088 5.686 0.119 R regressed on X and X2 Coefficients Standard Error t-Statistic P-Value Lower95% Upper95% Intercept 24.598 9.092 2.706 0.008 6.594 42.602 X 11.092 1.323 8.384 1.3E-13 8.472 13.712 X2 -0.100 0.044 -2.274 0.025 -0.188 -0.013 (a) Write out the equation for cost per customer as a function of website analysis. Is the coefficient of X2 statistically significant? (b) Write out the equation for revenue per customer as a function of website analysis. Are the coefficients of X and X2 statistically significant? (c) Assuming the firm's number of customers is independent of X, these results imply the marginal revenue, or marginal benefit, of website analysis is MB(X) = 11.092 - 0.2X and the marginal cost of website analysis is MC(X) = 0.206X. Under this assumption, what level of website analysis will maximize net benefits? Please show your
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