Question

Data is used by an online business to predict sales from each customer segment. A model is constructed that uses two quantitative predictor variables and the categorical variable Customer Segment (which can either be Corporate, Nonprofit, or Consumer). The p-values for all coefficients in the model are less than 0.01.

Outcome variable: monthly sales within a segment, in dollars Predictor variables: ·

Marketing budget: budget, in dollars, spent on marketing ·

Coupon Discount: percentage discount from overall transaction (each coupon discount promotion lasts one month) ·

Corporate: Dummy variable, equals 1 for purchases by the corporate segment, and 0 for all other segments

Nonprofit: Dummy variable, equals 1 for purchases by the nonprofit segment, and 0 for all other segments ·

Consumer: Dummy variable, not included in the model

Sales = $5,000 + 1.4*(marketing budget) + $900*(coupon discount) + $15,000*(corporate) + $3,000*(nonprofit) What is the projected sales from the nonprofit segment when the marketing budget is $15,000 and the coupon discount is 5 percent?

Need to know which one:

$30,500

$33,500

$48,500

$45,500

Answer 1

projected sales = $5,000 + 1.4*(marketing budget) + $900*(coupon discount) + $15,000*(corporate) + $3,000*(nonprofit)

= $5,000 + 1.4*15000+ $900*5+ $15,000*0+ $3,000*1 = $33500