Jim Royo, manager of Billings Building Supply (BBS), wants to develop a model to forecast BBS's monthly sales (in $1,000's).He selects the dollar value of residential building permits (in $10,000)as the predictor variable.An analysis of the data yielded the following tables: Using $\alpha$ = 0.05 the critical value of the Durbin-Watson statistic, d_L,is ___. A)1.24 B)1.22 C)1.13 D)1.15 E)1.85

Question

Quizplus · Accepted Answer

From the Durbin-Watson table, with n = 15 and k = 1 (one predictor variable), and α = 0.05, the critical values for dL and dU are 0.634 and 1.548 respectively. The value of d calculated from the data is 1.76. We test H0: d = 2 vs. H1: d ≠ 2. Since 1.548 < 1.76 < 2, the null hypothesis cannot be rejected at α = 0.05. Thus, we can conclude that there is no evidence of positive or negative autocorrelation in the residuals. The critical value of the Durbin-Watson statistic, dL and dU is 1.24.

Jim Royo, Manager of Billings Building Supply (BBS), Wants to Develop