A marketing analyst wants to examine the relationship between sales (in $1,000s) and advertising (in $100s) for firms in the food and beverage industry and collects monthly data for 25 firms. He estimates the model: Sales = β₀ + β₁ Advertising + ε. The following table shows a portion of the regression results. Which of the following are the competing hypotheses used to test whether the slope coefficient differs from 3? A) H₀: b₁ = 3; H_A: b₁ ≠ 3 B) H₀: b₁ = 2.88; H_A: b₁ ≠ 2.88 C) H₀: β₁ = 3; H_A: β₁ ≠ 3 D) H₀: β₁ = 2.88; H_A: β₁ ≠ 2.88

Question

Quizplus · Accepted Answer

The competing hypotheses used to test whether the slope coefficient differs from 3 are H₀: β₁ = 3 (null hypothesis) and H_A: β₁ ≠ 3 (alternative hypothesis). Option C correctly represents these hypotheses. Options A and B have incorrect values for the slope coefficient. Option D has the correct value for the slope coefficient but uses incorrect symbols for the hypotheses. Therefore, the best choice is C.

A Marketing Analyst Wants to Examine the Relationship Between Sales