Question 3 In this problem we will decompose a naive comparison of averages into a treatmenteffect and selection bias. Suppose a wine seller has 1000 different wines on offer and decides toadvertise half of them. We are asked to assess the effect of advertising on wine sales, and are givenlast month's sales figures.a) Explain in words why the 'naive' comparison of sales figures may not be informative of the ATE,ATT or ATU.b) What do you need to assume about selection bias for the comparison of sales figures to beinformative of the ATE, ATT and ATU? Also write your answer in terms of conditional expectations.c) Can the naive comparison equal the ATE even with selection bias? Explain.d) Assume average sales for advertised wines were $600, whereas non-advertised wines were $800.Assume also that the selection bias in o is -$300 and the selection bias in y, is -$400. Completethe table below and explain your answers. (Note: Half of wines are advertised).Not Advertised Advertised TotalSales with advertising$600Sales without advertising$800Difference

Introduction: The term Market refers to an exchange of goods and services between the buyer and the…

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uppose a wine seller has 1000 different wines on offer and decides to are asked to assess the effect of advertising on wine sales, and are given

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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