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Multiple Regression Analysis and Hypothesis Test

The Excel file contains this data on weekly gross revenues, television advertising expenditures, and newspaper advertising expenditures for Showtime Movie Theaters, all measured in thousands of dollars.

Weekly Gross Revenue Television Advertising Newspaper Advertising
96 5.0 1.5
90 2.0 2.0
95 4.0 1.5
92 2.5 2.5
95 3.0 3.3
94 3.5 2.3
94 2.5 4.2
94 3.0 2.5

a. Find an estimated regression equation relating weekly gross revenue to television expenditures and newspaper advertising expenditures.

b. Using a conservative measure that compensates for the number of independent variables in the model, comment on the goodness of fit. How much variability is accounted for in this regression model?

c. Does an overall test of significance say that the model is valid?

d. What is the outcome of individual t-tests for significance on the two independent variables?

e. Estimate gross revenues for Showtime given outlays of 4.5K$ for TV and 1.7K$ for newspaper advertising.


Solution Summary

The solution provides step-by-step method of performing a Multiple Regression Analysis and a Hypothesis Test. All the steps of hypothesis testing (formulation of null and alternate hypotheses, significance level, decision rule, p-value, conclusion) have been explained and the Multiple Regression Analysis has been shown in details.