Advertising expenditure

 Activity I – A manager claims that increases in advertising expenditure will surely raise the firm’s profits, citing his sense that people find the firm’s ads entertaining.

1. Sketch how you might refute this claim using:
   1. A theoretical argument
   2. Data
2. Why might the refutation using data be more convincing?

Activity II – A grocery store manager is interested in the data-generating process for her store’s weekly soda sales. She believes factors impacting these sales include price, product placement, and whether the week contains a holiday. Write out a formal representation of the data-generation process for weekly soda sales that incorporates these and additional factors.

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Activity III – Access the dataset Sales and Costs.xlsx (See the attached) and answer the following questions.

1. Calculate these descriptive statistics.
   1. Mean of sales
   2. Variance of materials costs
   3. Covariance of labor costs and materials costs
   4. Mean of labor costs
   5. Total sales
2. Calculate at least two more descriptive statistics for this dataset.