Instruction 12.2
A chocolate bar manufacturer is interested in trying to estimate how sales are influenced by the price of their product. To do this, the company randomly chooses six country towns and cities and offers the chocolate bar at different prices. Using chocolate bar sales as the dependent variable, the company will conduct a simple linear regression on the data below:
$\begin{array} { | l | l | l | } \hline \text { City } & \text { Price(\$) } & \text { Syles } \\\hline \text { Toowoomba } & 1.30 & 100 \\\hline \text { Broken Hill } & 1.60 & 50 \\\hline \text { Bendigo } & 1.80 & 50 \\\hline \text { Kalgoorlie } & 2.00 & 40 \\\hline \text { Launceston } & 2.40 & 38 \\\hline \text { Port Augusta } & 2.50 & 32 \\\hline\end{array}$
-Referring to Instruction 12.2,to test that the regression coefficient,?₁is not equal to 0,what would be the critical values? Use ? = 0.05.

Question

Instruction 12.2
A chocolate bar manufacturer is interested in trying to estimate how sales are influenced by the price of their product. To do this, the company randomly chooses six country towns and cities and offers the chocolate bar at different prices. Using chocolate bar sales as the dependent variable, the company will conduct a simple linear regression on the data below:

\begin{array} { | l | l | l | } \hline \text { City } & \text { Price(\$) } & \text { Syles } \\\hline \text { Toowoomba } & 1.30 & 100 \\\hline \text { Broken Hill } & 1.60 & 50 \\\hline \text { Bendigo } & 1.80 & 50 \\\hline \text { Kalgoorlie } & 2.00 & 40 \\\hline \text { Launceston } & 2.40 & 38 \\\hline \text { Port Augusta } & 2.50 & 32 \\\hline\end{array}

-Referring to Instruction 12.2,to test that the regression coefficient,?₁is not equal to 0,what would be the critical values? Use ? = 0.05.

Quizplus · Accepted Answer

The critical values for a two-tailed test with α = 0.05 and degrees of freedom (df) = n - 2 (where n is the number of observations) for this scenario are ±2.7765. Since there are 6 observations, df = 6 - 2 = 4. Looking up the critical value for df = 4 in a t-distribution table at α = 0.05 for a two-tailed test gives ±2.7765.

Instruction 12 -Referring to Instruction 12