Sales Model Analysis

In the context of regression, do you know the difference between y and y^?

• Yes

• No

Choose the incorrect statement(s):

• True

• False

Which of the following model addresses the decreasing returns to scale effect of Advertising Spending on Sales?

• lnSalest=β0+β1.Pricet+β2.lnAdvertisingt+εt

• lnSalest=β0+β1.Pricet+β2.Advertisingt+εt

• Salest=β0+β1.Pricet+β2.lnAdvertisingt+εt

• All of the above

Which of the following model(s) give(s) you the elasticity for Advertising Spending?

• lnSalest=β0+β1.Pricet+β2.lnAdvertisingt+εt

• lnSalest=β0+β1.Pricet+β2.Advertisingt+εt

• Salest=β0+β1.Pricet+β2.lnAdvertisingt+εt

• All of the above

If you expect decrease returns to scale effect for Advertising Spending and a linear relationship between Price and Sales, which model(s) is(are) correct?

• lnSalest=β0+β1.Pricet+β2.lnAdvertisingt+εt

• lnSalest=β0+β1.Pricet+β2.Advertisingt+εt

• Salest=β0+β1.Pricet+β2.lnAdvertisingt+εt

• All of the above