TABLE 13-1 A large national bank charges local companies for using their services. A bank official reported the results of a regression analysis designed to predict the bank's charges (Y) -- measured in dollars per month -- for services rendered to local companies. One independent variable used to predict service charge to a company is the company's sales revenue (X) -- measured in millions of dollars. Data for 21 companies who use the bank's services were used to fit the model: E(Y) = β 0 + β 1 X The results of the simple linear regression are provided below. Y = -2,700 + 20X, S YX = 65, two-tail p value of 0.034 (for testing β 1 ) -Referring to Table 13-1, interpret the p-value for testing whether β₁ exceeds 0. A) There is sufficient evidence (at the α = 0.05) to conclude that sales revenue (X) is a useful linear predictor of service charge (Y). B) There is insufficient evidence (at the α = 0.10) to conclude that sales revenue (X) is a useful linear predictor of service charge (Y). C) Sales revenue (X) is a poor predictor of service charge (Y). D) For every $1 million increase in sales revenue, we expect a service charge to increase $0.034.

Question

Quizplus · Accepted Answer

The p-value of 0.034 is less than the significance level of 0.05, so we reject the null hypothesis and conclude that β₁ exceeds 0.

TABLE 13-1 A Large National Bank Charges Local Companies for Using Their