# The manager of a firm wants to examine the effects of advertising

1. The manager of a firm wants to examine the effects of advertising campaigns onthe sales of the product. He collects data on advertising expenditure (\$000s) andsales revenue (\$000s) from 17 stores located in different cities, and estimates thefollowing regression equation:Salei = Bo + B1 Expenditure; + &;The output when using Excel to estimate the equation is given below:Regression statisticsMultiple R0.98R squareAAdjusted0.95R squareStandard73.52errorObservations15.00ANOVAdfSSMSFSignificantFRegression1.001544985.221544985.22285.840.00Residual13.0070264.785404.98Total14.001615250.00CoefficientsStandardt StatP-valueErrorIntercept-644.95B-8.850.00Expenditure195.0711.54C0.00a. Find the value of A, B, and C, and interpret their meanings.b. Find the simple regression line and interpret the coefficients.c. Can the manager conclude that there is a positive relationship betweenadvertising expenditure and sales at the 1% significance level?d. The manager concludes that the advertising campaigns have been successfulbecause higher advertising expenditure caused higher sales. Why might themanager be wrong?