Hiroshi Sato, an owner of a sushi restaurant in San Francisco,has been following an aggressive marketing campaign to thwart theeffect of rising unemployment rates on business. He used monthlydata on sales ($1,000s), advertising costs ($), and theunemployment rate (%) from January 2008 to May 2009 to estimate thefollowing sample regression equation: Salesˆt = 12.43 +0.02Advertising Costst−1 − 0.52Unemployment Ratet−1. a. Hiroshi hadbudgeted $540 toward advertising costs in May 2009. Make a forecastfor Sales for June 2009 if the unemployment rate in May 2009 was8%. (Enter your answer in dollars not in thousands.) Salesˆt $23.22 23.22 Incorrect b. What will be the forecast if he raises hisadvertisement budget to $640? (Enter your answer in dollars not inthousands.) Salesˆt $ 21.07 21.07 Incorrect c. Reevaluate the aboveforecasts if the unemployment rate was 8.6% in May 2009. (Enteryour answers in dollars not in thousands.) Advertising Salesˆt 540$ 31.96 31.96 Incorrect 640 $ 20.75 20.75 Incorrect
