Impact of Regression Coefficients on Sales Revenue

Medium Multiple Regression Analysis Regression Coefficients

XYZ Corporation conducted a study to understand the impact of various factors on its sales revenue. They developed a multiple regression model with the following equation:

Sales Revenue = β₀ + β₁*(Advertising) + β₂*(Price) + β₃*(Market Size) + ε

In this model, β₁, β₂, and β₃ denote the coefficients for the variables Advertising, Price, and Market Size, respectively. After conducting the regression analysis, the company determined the coefficients as follows: β₁ = 200, β₂ = -150, and β₃ = 3.5.

Based on these coefficients, which of the following statements regarding the impact of a one-unit increase in each variable on the sales revenue is true?

A one-unit increase in Advertising is expected to increase Sales Revenue by $200, while a one-unit increase in Price is expected to decrease Sales Revenue by $150.

A one-unit increase in Market Size will lead to an increase in Sales Revenue by $3.50, and the effect of Advertising will increase Sales Revenue by $350.

A one-unit increase in Price will lead to an increase in Sales Revenue by $150.

Hint

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