Question

Your name Spring 2019/ECON 3789/Assignment 1 n:7 ANOVA Source MS lue .0103 Regression 2,133.3333 H 1 2,133.3333 16.00 Residual 666.6667 (n)5 133.3333 n- Regression output b Confidence interral Variables Coefficients std error tdf 3)p-value 9596 lower 9596 upper Intercept 63.3333 7.9682 7.948 .0005 42.8505 83.8162 Advertising 6.6667 1.6667 4.000 .0103 Problem 4. A local grocery store wants to predict its daily sales in dollars. The manager believes that the amount of newspaper advertising significantly affects sales. She randomly selects 7 days of data consisting of daily grocery store sales (in thousands of dollars) and advertising expenditures (in . The partial Excel output given above regression model. a. At a significance level of.05, test the significance of the slope and state your conclusion. Use the critical value approach. Step 1: H Ho Ha B Step 2: Level of significance Step 3: Test statistic

Answer 1

Given, Let Ybe the grocery store sales and Xbe the advertising expenditures. Number of days n7 a) Step 2: Level of significancea 0.05 Step 3: From the Regression output, thettest statistic value corresponding to Advertising is 4.000 Degrees of freedom: n-2 7-2-5 From the t distribution table, for the two tail test, the critical value corresponding to the 5 degrees freedom at 0.05 level of significance is 2.571.

Distribution Plot T, df 5 0.4 0.3 C 0.2 0.1 0.025 0.025 0.0 2.571 2.571 Decision: Reject Ho, if the test statistic value is greater than the critical value. Conclusion: Since 4.000>2.571, reject the null hypothesis. Therefore, it is concluded that the slope coefficient is significantly different from 0.