Exhibit 12-3
Regression analysis was applied between sales data (in $1,000s) and advertising data (in $100s) and the following information was obtained.

-Refer to Exhibit 12-3. The t statistic for testing the significance of the slope is
A)1.80
B)1.96
C)6.709
D)0.555

Question

Exhibit 12-3
Regression analysis was applied between sales data (in $1,000s) and advertising data (in $100s) and the following information was obtained.
 
-Refer to Exhibit 12-3. The t statistic for testing the significance of the slope is
A)1.80 
B)1.96 
C)6.709 
D)0.555

Quizplus · Accepted Answer

The t statistic for testing the significance of the slope is given by the formula t = b/SE(b), where b is the slope coefficient and SE(b) is the standard error of the slope coefficient. From the output, we can see that the value of b is 6.2 and the value of SE(b) is 0.9261. Thus, the t statistic is calculated as t = 6.2/0.9261 = 6.709, which is the value given in choice C. This value is greater than the critical value of 2.069 (at 5% significance level with 21 degrees of freedom), indicating that the slope is significant at the 5% level. Therefore, the best choice is C.

Exhibit 12-3 Regression Analysis Was Applied Between Sales Data (In $1,000s) and $1,000s)