TABLE 14-5
A microeconomist wants to determine how corporate sales are influenced by capital and wage spending by companies. She proceeds to randomly select 26 large corporations and record information in millions of dollars. The Microsoft Excel output below shows results of this multiple regression.
-Referring to Table 14-5, at the 0.01 level of significance, what conclusion should the microeconomist reach regarding the inclusion of Capital in the regression model?
A) Capital is significant in explaining corporate sales and should be included in the model because its p-value is less than 0.01.
B) Capital is significant in explaining corporate sales and should be included in the model because its p-value is more than 0.01.
C) Capital is not significant in explaining corporate sales and should not be included in the model because its p-value is less than 0.01.
D) Capital is not significant in explaining corporate sales and should not be included in the model because its p-value is more than 0.01.

Question

TABLE 14-5
A microeconomist wants to determine how corporate sales are influenced by capital and wage spending by companies. She proceeds to randomly select 26 large corporations and record information in millions of dollars. The Microsoft Excel output below shows results of this multiple regression. 
-Referring to Table 14-5, at the 0.01 level of significance, what conclusion should the microeconomist reach regarding the inclusion of Capital in the regression model?
A) Capital is significant in explaining corporate sales and should be included in the model because its p-value is less than 0.01. 
B) Capital is significant in explaining corporate sales and should be included in the model because its p-value is more than 0.01. 
C) Capital is not significant in explaining corporate sales and should not be included in the model because its p-value is less than 0.01. 
D) Capital is not significant in explaining corporate sales and should not be included in the model because its p-value is more than 0.01.

Quizplus · Accepted Answer

The p-value of Capital is 0.067, which is greater than 0.01. Therefore, the microeconomist should conclude that Capital is not significant in explaining corporate sales and should not be included in the model.

TABLE 14-5 A Microeconomist Wants to Determine How Corporate Sales Are Influenced