Understanding Regression Coefficients in Advertising

Very Easy Multiple Regression Analysis Regression Coefficients

In a study examining the relationship between advertising expenditure (in thousands of dollars) and sales revenue (in thousands of dollars), a simple linear regression was performed. The regression output indicated that the regression equation is:

$$ ext{Sales} = 50 + 3 imes ext{Advertising}$$

In this equation, the coefficient of the advertising variable is 3. This coefficient represents:

The expected increase in sales revenue for every additional thousand dollars spent on advertising.

The total sales revenue when no money is spent on advertising.

The percentage increase in sales revenue for each dollar increase in advertising.

Hint

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