Question #57

Reading: Reading 1 Multiple Regression

PDF File: Reading 1 Multiple Regression.pdf

Page: 27

Status: Unattempted

Correct Answer: A

Part of Context Group: Q57-60 First in Group
Shared Context
- According to the model and the data for the Chicago metropolitan area, the forecast of generator sales is: A) $55 million above average. B) $35.2 million above the average. C) $65 million above the average.
Question
Williams proceeds to test the hypothesis that none of the independent variables has significant explanatory power. Using the joint F-test for the significance of all slope coefficients, at a 5% level of significance:
Answer Choices:
A. none of the independent variables has explanatory power
B. all of the independent variables have explanatory power
C. at least one of the independent variables has explanatory power
Explanation
From the ANOVA table, the calculated F-statistic is (mean square regression / mean square error) = (83.80 / 28.88) = 2.9017. From the F distribution table (4 df numerator, 21 df denominator) the critical F value is 2.84. Because 2.9017 is greater than 2.84, Williams rejects the null hypothesis and concludes that at least one of the independent variables has explanatory power.
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