Understanding Coefficients in Multiple Regression Analysis

Easy Multiple Regression Analysis Regression Coefficients

Consider a multiple regression analysis conducted to predict the sales of a retail store based on advertising expenditures on television, radio, and online platforms. The estimated regression equation is as follows:

$$ Sales = 200 + 1.5 imes TV + 0.8 imes Radio + 0.5 imes Online $$

In this model, the coefficients on the independent variables reveal specific insights regarding the relationship between the advertising expenses and sales.

What does the coefficient of 1.5 for TV advertising expenditures imply about the sales when all other variables are held constant?

For every additional unit spent on TV advertising, sales increase by an average of 1.5 units.

For every unit increase in sales, TV advertising needs to increase by 1.5 units.

TV advertising has no effect on sales when the expenditures on radio and online advertising are also considered.

Hint

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