Dixie Showtime Movie Theaters, Inc., owns and operates a chain of cinemas in several markets in the southern U. S. 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. Market
Weekly Gross Revenue
($100s)
Television Advertising
($100s)
Newspaper Advertising
($100s)
Mobile
101.3
5
1.5
Shreveport
51.9
3
3
Jackson
74.8
4
1.5
Birmingham
126.2
4.3
4.3
Little Rock
137.8
3.6
4
Biloxi
101.4
3.5
2.3
New Orleans
237.8
5
8.4
Baton Rouge
219.6
6.9
5.8
(a) Use the data to develop an estimated regression with the amount of television advertising as the independent variable.
Let x represent the amount of television advertising.
If required, round your answers to four decimal places. For subtractive or negative numbers use a minus sign even if there is a + sign before the blank. (Example: -300)
= + x
Test for a significant relationship between television advertising and weekly gross revenue at the 0.05 level of significance. What is the interpretation of this relationship?
The input in the box below will not be graded, but may be reviewed and considered by your instructor.
(b) How much of the variation in the sample values of weekly gross revenue does the model in part (a) explain?
If required, round your answer to two decimal places.
%
(c) Use the data to develop an estimated regression equation with both television advertising and newspaper advertising as the independent variables.
Let x1 represent the amount of television advertising.
Let x2 represent the amount of newspaper advertising.
If required, round your answers to four decimal places. For subtractive or negative numbers use a minus sign even if there is a + sign before the blank. (Example: -300)
= + x1 + x2
Is the overall regression statistically significant at the 0.05 level of significance? If so, then test whether each of the regression parameters β0, β1, and β2 is equal to zero at a 0.05 level of significance. What are the correct interpretations of the estimated regression parameters? Are these interpretations reasonable?
The input in the box below will not be graded, but may be reviewed and considered by your instructor.
(d) How much of the variation in the sample values of weekly gross revenue does the model in part (c) explain?
If required, round your answer to two decimal places.
%
(e) Given the results in part (a) and part (c), what should your next step be? Explain.
The input in the box below will not be graded, but may be reviewed and considered by your instructor.
(f) What are the managerial implications of these results?
The input in the box below will not be graded, but may be reviewed and considered by your instructor.