Question
Note: Assume alpha=0.05 for all questions. The price of the Snake Oil brand energy drink fluctuates from month to month due to the change in
Note: Assume alpha=0.05 for all questions.
The price of the "Snake Oil" brand energy drink fluctuates from month to month due to the change in raw material prices and other factors. The company that sells this drink also advertises several times a month. The company wishes to investigate the impact of price and advertising on energy drink sales and collects monthly sales data (in thousands of dollars), number of advertisements per month and the average monthly price of the energy drink (in dollars).The company suspects that higher prices lead to lower sales and more advertising leads to greater sales. In addition, the company also expects that the negative impact of prices on sales is affected by the level of advertising such that higher levels of advertising may lower the negative effect of price. Express the regression model that the company must estimate to test their intuition, state the relevant hypothesis, estimate the model and provide interpretation. Given the results of your estimation, predict the energy drink sales when the company spends on 10 advertisements and prices the drink is set at $0.99. The data is in SnakeOil.sav .
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