mdcat logical reasoning MCQ #636

A company's sales data shows a strong correlation between the amount spent on advertising and the number of units sold. If the company also collects data on the price of the product, what can be concluded about the relationship between advertising and sales?

mdcat logical reasoning MCQ #636

  1. Question 1

    Q1. A company's sales data shows a strong correlation between the amount spent on advertising and the number of units sold. If the company also collects data on the price of the product, what can be concluded about the relationship between advertising and sales?

    • A) Advertising has a direct impact on sales
    • B) The relationship between advertising and sales is mediated by product price
    • C) The correlation between advertising and sales is due to a common underlying factor
    • D) The data is insufficient to draw conclusions about the relationship between advertising and sales

    Answer: The relationship between advertising and sales is mediated by product price

    Explanation: The price of the product may influence both advertising spend and sales, making it a potential mediating variable