Reference no: EM132907106

1. Measuring Advertising Effectiveness

a) When measuring advertising effectiveness, Firm A compares sales from individuals who have been exposed to ads to sales from individuals who have not been exposed to ads. What is wrong with this approach?

b) When measuring advertising effectiveness, Firm B compares sales over time. Firm B finds that the more the firm advertises, the higher the sales are. What is wrong with this approach?

2. College Preparation Programs and SAT Scores

Many programs strive to help students prepare for college entrance exams, such as the SAT. In an effort to study the effectiveness of these preparatory programs, a researcher draws a random sample of students attending public school in the US, and compares the SAT scores of those who took a preparatory class to those who did not. The researcher finds that students who enroll in these programs have worse SAT scores than those who do not enroll.

a) Is this an experiment or an observational study?

b) If you think it is an observational study, tell a concrete story about why selection bias might explain these differences between those who did and did not enroll. If you think it is an experiment, explain what potential problems the experiment overcomes.