Question: Kim K. asks you to develop a demand forecast for her perfume line. Using the data provided, you find a regression model, y = 4

Kim K. asks you to develop a demand forecast for her perfume line. Using the data provided, you find a regression model, y = 4 - 3.36x1 + 2.84x2, with the undernoted parameters.

Parameters: R2= 0.88

Sig of F: 0.04

p-value of x1= 0.05

p-value of x2= 0.04

x1 denotes Selling price

x2 denotes Advertising

y denotes Demand

Kim asks you the following question please answer her. Would a unit increase in advertising (x2) result in an increase of 2.84 units in Demand (y)?

a.

Yes, because for a unit increase in x2, y increases by 2.84 units on average, provided x1 is kept constant

b.

Yes, because for a unit increase in x2, y increases by 2.84 units, provided x1 is kept constant

c.

Yes, because for a 3.36 units increase in y, x2 increases by 1 unit

d.

No, because for a unit increase in y, x1 increases by 3.36 unit

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