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You may need to use the appropriate technology to answer this question. Dixie Showtime Movie Theaters, Inc. owns and operates a chain of cinemas in

You may need to use the appropriate technology to answer this question.

Dixie Showtime Movie Theaters, Inc. owns and operates a chain of cinemas in several markets in the southern United States. The owners would like to estimate weekly gross revenue as a function of advertising expenditures. Data for a sample of eight markets for a recent week follow. (Let x1 represent Television Advertising ($100s), x2 represent Newspaper Advertising ($100s), and y represent Weekly Gross Revenue ($100s).)

Market Weekly Gross Revenue ($100s) Television Advertising ($100s) Newspaper Advertising ($100s)
Market 1 101.3 5.1 1.6
Market 2 51.9 2.9 3.1
Market 3 74.8 3.9 1.6
Market 4 126.2 4.2 4.4
Market 5 137.8 3.7 4.1
Market 6 101.4 3.6 2.2
Market 7 237.8 4.9 8.3
Market 8 219.6 6.8 5.9

(a)

Develop an estimated regression equation with the amount of television advertising as the independent variable. (Round your numerical values to four decimal places.)

=

Test for a significant relationship between the amount spent on television advertising and weekly gross revenue at the 0.05 level of significance. (Use the t test.)

Find the p-value. (Round your answer to four decimal places.)

p-value =

State your conclusion.

We fail to reject H0. We cannot conclude that there is a relationship between the amount spent on television advertising and weekly gross revenue.We reject H0. We cannot conclude that there is a relationship between the amount spent on television advertising and weekly gross revenue. We reject H0. We can conclude that there is a relationship between the amount spent on television advertising and weekly gross revenue.We fail to reject H0. We can conclude that there is a relationship between the amount spent on television advertising and weekly gross revenue.

What is the interpretation of this relationship?

This is our best estimate of the weekly gross revenue given the amount spent on television advertising.This is our best estimate of the weekly gross revenue given the amount spent on newspaper advertising. This is our best estimate of the amount spent on newspaper advertising given the weekly gross revenue.This is our best estimate of the amount spent on television advertising given the weekly gross revenue.

(b)

How much of the variation in the sample values of weekly gross revenue (in %) does the model in part (a) explain? (Round your answer to two decimal places.)

%

(c)

Develop an estimated regression equation with both television advertising and newspaper advertising as the independent variables. (Round your numerical values to four decimal places.)

=

Test whether the regression parameter 0 is equal to zero at a 0.05 level of significance.

Find the p-value. (Round your answer to four decimal places.)

p-value =

State your conclusion.

We reject H0. We cannot conclude that the y-intercept is not equal to zero.We reject H0. We can conclude that the y-intercept is not equal to zero. We fail to reject H0. We cannot conclude that the y-intercept is not equal to zero.We fail to reject H0. We can conclude that the y-intercept is not equal to zero.

Test whether the regression parameter 1 is equal to zero at a 0.05 level of significance.

Find the p-value. (Round your answer to four decimal places.)

p-value =

State your conclusion.

We reject H0. We can conclude that there is a relationship between the amount spent on television advertising and weekly gross revenue.We reject H0. We cannot conclude that there is a relationship between the amount spent on television advertising and weekly gross revenue. We fail to reject H0. We cannot conclude that there is a relationship between the amount spent on television advertising and weekly gross revenue.We fail to reject H0. We can conclude that there is a relationship between the amount spent on television advertising and weekly gross revenue.

Test whether the regression parameter 2 is equal to zero at a 0.05 level of significance.

Find the p-value. (Round your answer to four decimal places.)

p-value =

State your conclusion.

We fail to reject H0. We cannot conclude that there is a relationship between the amount spent on newspaper advertising and weekly gross revenue.We reject H0. We cannot conclude that there is a relationship between the amount spent on newspaper advertising and weekly gross revenue. We reject H0. We can conclude that there is a relationship between the amount spent on newspaper advertising and weekly gross revenue.We fail to reject H0. We can conclude that there is a relationship between the amount spent on newspaper advertising and weekly gross revenue.

Interpret 0 and determine if this is reasonable.

The intercept occurs when both independent variables are one. Thus, 0 is the estimate of the weekly gross revenue when there is $100 spent on both television and newspaper advertising. This regression parameter was based on extrapolation, so it is not reasonable.The intercept occurs when both independent variables are one. Thus, 0 is the estimate of the weekly gross revenue when there is $100 spent on both television and newspaper advertising. This regression parameter was based on extrapolation, so it is reasonable. The intercept occurs when both independent variables are zero. Thus, 0 is the estimate of the weekly gross revenue when there is no money spent on television or newspaper advertising. This regression parameter was based on extrapolation, so it is not reasonable.The intercept occurs when both independent variables are zero. Thus, 0 is the estimate of the weekly gross revenue when there is no money spent on television or newspaper advertising. This regression parameter was based on extrapolation, so it is reasonable.

Interpret 1 and determine if this is reasonable.

1 describes the change in y when there is a one-unit increase of x1 and x2 is held constant. Thus, 1 is the estimated change in the weekly gross revenue when newspaper advertising is held constant and there is a $100 increase in television advertising. This regression parameter is not reasonable.1 describes the change in y when there is a one-unit increase of x2 and x1 is held constant. Thus, 1 is the estimated change in the weekly gross revenue when television advertising is held constant and there is a $100 increase in newspaper advertising. This regression parameter is not reasonable. 1 describes the change in y when there is a one-unit increase of x2 and x1 is held constant. Thus, 1 is the estimated change in the weekly gross revenue when television advertising is held constant and there is a $100 increase in newspaper advertising. This regression parameter is reasonable.1 describes the change in y when there is a one-unit increase of x1 and x2 is held constant. Thus, 1 is the estimated change in the weekly gross revenue when newspaper advertising is held constant and there is a $100 increase in television advertising. This regression parameter is reasonable.

Interpret 2 and determine if this is reasonable.

2 describes the change in y when there is a one-unit increase of x1 and x2 is held constant. Thus, 2 is the estimated change in the weekly gross revenue when newspaper advertising is held constant and there is a $100 increase in television advertising. This regression parameter is reasonable.2 describes the change in y when there is a one-unit increase of x2 and x1 is held constant. Thus, 2 is the estimated change in the weekly gross revenue when television advertising is held constant and there is a $100 increase in newspaper advertising. This regression parameter is reasonable. 2 describes the change in y when there is a one-unit increase of x1 and x2 is held constant. Thus, 2 is the estimated change in the weekly gross revenue when newspaper advertising is held constant and there is a $100 increase in television advertising. This regression parameter is not reasonable.2 describes the change in y when there is a one-unit increase of x2 and x1 is held constant. Thus, 2 is the estimated change in the weekly gross revenue when television advertising is held constant and there is a $100 increase in newspaper advertising. This regression parameter is not reasonable.

(d)

How much of the variation in the sample values of weekly gross revenue (in %) does the model in part (c) explain? (Round your answer to two decimal places.)

%

(e)

Given the results in parts (a) and (c), what should your next step be? Explain.

This answer has not been graded yet.

(f)

What are the managerial implications of these results?

Management can feel confident that increased spending on ---Select--- only newspaper only television both television and newspaper advertising coincides with increased weekly gross revenue. The results also suggest that ---Select--- television newspaper advertising may be slightly more effective than ---Select--- television newspaper advertising in generating revenue.

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