TABLE 12-5
The managing partner of an advertising agency believes that his company's sales are related to the industry sales. He uses Microsoft Excel to analyze the last four years of quarterly data (i.e., n = 16) with the following results:

-Referring to Table 12-5, the partner wants to test for autocorrelation using the Durbin-Watson statistic. Using a level of significance of 0.05, the decision he should make is:
A) there is evidence of autocorrelation.
B) the test is unable to make a definite conclusion.
C) there is no evidence of autocorrelation.
D) there is not enough information to perform the test.

Question

TABLE 12-5
The managing partner of an advertising agency believes that his company's sales are related to the industry sales. He uses Microsoft Excel to analyze the last four years of quarterly data (i.e., n = 16) with the following results:
 
-Referring to Table 12-5, the partner wants to test for autocorrelation using the Durbin-Watson statistic. Using a level of significance of 0.05, the decision he should make is:
A) there is evidence of autocorrelation. 
B) the test is unable to make a definite conclusion. 
C) there is no evidence of autocorrelation. 
D) there is not enough information to perform the test.

Quizplus · Accepted Answer

Looking at the Durbin-Watson statistic values in the table, we find that the dL and dU values are 0.766 and 1.534, respectively. The calculated Durbin-Watson statistic value for the data is 1.61. Since the calculated value falls between dL and dU, we fail to reject the null hypothesis that there is no autocorrelation in the data. Therefore, the decision should be that there is no evidence of autocorrelation.

TABLE 12-5 The Managing Partner of an Advertising Agency Believes That His