Question

A retail analyst builds a linear regression model to predict monthly store revenue based on advertising spend. The model output shows an R-squared value of 0.34 with a statistically significant coefficient (p < 0.01) for advertising spend. How should the analyst interpret these results?

Accepted Answer

Advertising spend has a significant relationship with revenue, but the model explains only about 34% of the variation in revenue, so other factors are important.

Answer

The model is invalid because an R-squared below 0.50 means the relationship is not statistically significant.

Answer

Advertising spend causes 34% of all store revenue and should be increased to maximize sales.

Answer

The p-value below 0.01 indicates the model explains 99% of the variation in revenue.