# Question: If a firm spends more on advertising is it likely

If a firm spends more on advertising, is it likely to increase sales? Data on annual sales (in $100,000s) and advertising expenditures (in $10,000s) were collected for 20 firms in order to estimate the model Sales = β0 + β1 Advertising + .

A portion of the Excel results is as follows:

a. Is the sign on the slope as expected? Explain.

b. What is the sample regression equation?

c. Predict the sales for a firm that spends $500,000 annually onadvertising.

A portion of the Excel results is as follows:

a. Is the sign on the slope as expected? Explain.

b. What is the sample regression equation?

c. Predict the sales for a firm that spends $500,000 annually onadvertising.

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