A store wants to analyze the relationship between sales and several explanatory variables. These include advertising expenditures (ADV), bonus to workers (BONUS) and regions where it is operating. The regional variables are represented by MIDWEST = 1 if territory is in the Midwest
= 0 otherwise
WEST = 1 if territory is in the West
= 0 otherwise
SOUTH = 1 if territory is in the South
= 0 otherwise
Sales, advertising expenditures, and Bonus are measured in thousands of dollars. Given STATA output of the regression results, answer the following questions:
Construct a table of fitted regression models with and without regional factors (show clearly the full model and the reduced model).
Use * =.1 , **=.05 and ***=.01 to indicate which coefficients of the two models are statistically significant.
Interpret the coefficient of the variable WEST.
Interpret the coefficient of the variable Adv in the full model
Using the reduced model find R-squared and test for overall significance of this model using 5% significance level (optional if it can be done by hand)