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Ordinary Least Squares Is Used to Estimate a Linear Relationship

Question 27

Multiple Choice

Ordinary least squares is used to estimate a linear relationship between a firm's total revenue per week (in thousands of dollars) and the average percentage discount from list price allowed to customers by salespeople. A 95 percent confidence interval on the slope is calculated from the regression output. The interval ranges from 1.05 to 2.38. Based on this result, the researcher


A) can conclude that the slope is significantly different from zero at the 5 percent level of significance.
B) can be 95 percent confident that the effect of a 1 percent increase in the average price discount will increase weekly total revenue by between $1,050 and $2,380.
C) has a 1-in-20 chance of incorrectly concluding that the slope is within the estimated confidence interval.
D) All of the above are correct.

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