Question

Below we see a plot showing the relationship between advertising budget, units sold, and Group (A or B).

The numbers labeling the x-axis, advertising budget, are 1, 10, 100, 1000, 10000, and 100000
The numbers labeling the y-axis, unis sold, are 1, 10, 100, 1000, 10000, 100000, etc.
Straight-line trend lines are shown for Group A and Group B. They do not appear to be exactly parallel, but close enough for us to make some interpretations based on approximately parallel lines. The trend line for Group A is higher than the trend line for Group B.
Assuming these trend lines are approximately parallel, we can conclude that
a. the total number of units sold is higher in Group A than Group B.
b. overall, the predicted number of units sold is higher in Group A than Group B.
c. when controlling for budget, the predicted number of units sold is higher in Group A than Group B.

Answer 1

The correct interpretation of the plot with approximately parallel trend lines, where Group A's line is higher than Group B's, is that when controlling for the advertising budget, Group A is expected to sell more units than Group B.

Step-by-step explanation:

If we have a plot showing the relationship between advertising budget, units sold, and groups (A or B) with approximately parallel straight-line trend lines, and Group A's trend line is higher on the graph than Group B's, it suggests a direct relationship between the advertising budget and units sold for both groups. The fact that Group A's trend line is higher indicates that for a given advertising budget, Group A is predicted to sell more units than Group B. This can be understood by interpreting the y-intercept and the slope of the trend lines. The y-intercept indicates where the line crosses the y-axis, which would correspond to the number of units sold when the advertising budget is zero. The slope, defined as the change in units sold (rise) over the change in advertising budget (run), shows how the number of units sold increases with an increase in the advertising budget.

Given this information, the correct conclusion we can draw is that:

• When controlling for budget, the predicted number of units sold is higher in Group A than in Group B.

This conclusion accounts for the same level of advertising spend across both groups while comparing their predicted sales outcomes.