Jim Royo,manager of Billings Building Supply (BBS),wants to develop a model to forecast BBS's monthly sales (in $1,000's).He selects the dollar value of residential building permits (in $10,000)as the predictor variable.An analysis of the data yielded the following tables: Jim's calculated value for the Durbin-Watson statistic is 1.93.Using $\alpha$ = 0.05,the appropriate decision is: ___. A)do not reject H₀: $\rho$ = 0 B)reject H₀:$\rho$≠ 00 C)do not reject: $\rho$ $\neq$ 0 D)the test is inconclusive E)reject H₀: $\rho$ = 0

Question

Quizplus · Accepted Answer

Since the Durbin-Watson statistic is closer to 2 (the value under the null hypothesis), and the calculated F-statistic is less than the F-critical value at the 0.05 level of significance, we do not reject the null hypothesis that there is no linear relationship between the dollar value of residential building permits and monthly sales. Therefore, the best choice is to not reject HS0 (null hypothesis).

Jim Royo,manager of Billings Building Supply (BBS),wants to Develop a Model