You have been provided with data for Sales and Advertising. Assume there are no outliers in the data.
a. Estimate this model using regression analysis.
Sales = β0 + β1*advertising + β2*advertising 2
Is there a non-linear relationship between Sales and Advertising? Explain ( Completed on Spreadsheet) Is this correct see attached spreadsheet.
What is the marginal impact of advertising on sales if advertising is increased from $1300 to $1400? What is the marginal impact on sales if advertising is increased from $2500 to $2600? Please comment on any differences.
Estimate this model.
Sales t = β0 + β1*advertising t + β2*advertising t
2 + β3*advertising t-1
Based on your model, is there a lead/lag relationship between Advertising and Sales? Explain.