Understanding dummy variables

Selling craft beer is highly competitive. Increasing in-store visibility usually generates additional sales. Therefore, the brewery makes use of point-of-sales display ads. The volume sales of Hoppiness were recorded for all weeks with and without displays.

It is useful to start with examining log(SALES) separately for DISPLAY and no-DISPLAY activities. You can do this by using the function aggregate(). The aggregate() function can also operate on formula statements, a feature making its usage quite handy. Here, log(SALES) ~ DISPLAY groups log(SALES) according to the levels in DISPLAY. The function argument FUN applies a specified function to each level. Again, you calculate some simple descriptive measures using the functions mean(), min() and max().

Calculate the mean of log(SALES) for each level in DISPLAY.
Calculate the minimum of log(SALES) for each level in DISPLAY.
Calculate the maximum of log(SALES) for each level in DISPLAY.

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Exercise

Understanding dummy variables

Instructions