You have just completed a regression study in which you are attempting to link weekly sales of SeaFarer’s new sun block spray to three factors: price, advertising and use of a special point of purchase promotion. You used a dummy variable, x3 , to represent the promotion factor— assigning x3 a value of β = 0 if no in store promotion was used and a value of 1 if the promotion was used. Output for the study is given below:
a. Can you reject the “All s are0”null hypothesis here at the 5% significance level? Explain.
b. In this three variable model, does the promotion variable have a significant effect, at the 5% significance level, on sales? Explain.
c. When the regression model was rerun using only promotion as the independent variable, the p value for the dummy variable representing promotion was .01, making promotion a significant variable at the .05 significance level. What’s going on here?

  • CreatedJuly 16, 2015
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