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In this Exercise 14.58, we repeat the information from Exercises 14.22. Presuming that the assumptions for regression inferences are met, decide at the specified significance level whether the data provide sufficient evidence to conclude that the predictor variable is useful for predicting the response variable.

Following are the data on the percentage of investments in energy securities and tax efficiency from Exercise 14.22. Use α=0.05.

Short Answer

Expert verified

The statistics show that the slope of the population regression line is not 0, and thus the variable (x) can be used to forecast the variable, tax efficiency (y).

Step by step solution

01

Given Information

α=0.05

02

Explanation

Decide the Null and Alternate hypothesis

H0:β1=0(xis not useful for predicting y)

Ha:β1≠0(xis useful for predicting y)

We need to determine the significance level α

The hypothesis test should be run at a significance threshold of 5%, or α=0.05.

Computation table

Sxy=∑xiyi-∑xi∑yi/n=4376.95-(55.9)(832.5)/10=4376.95-46536.75/10=4376.95-4653.675=-276.725

Sxx=∑xi2-∑xi2/n=365.05-(55.9)2/10=365.05-3124.81/10=365.05-312.481=52.569

03

Calculation

The entire amount of square SST is calculated as follows:

Syy=∑yi2-∑yi2/n=70838.49-(832.5)2/10=70838.49-693056.25/10=70838.49-69305.625=1532.865

SSR regression sum of squares is calculated as follows:

SSR=Sxy2Sxx=(-276.725)252.569=76576.7256252.569=1456.689791

SSE=SST-SSR=1532.865-1456.689791=76.17520896

The slope of the regression line is calculated using the formula,

b1=SxySxx=-276.72552.569=-5.264033936

The standard error of the estimate is calculated using the formula:

se=SSEn-2=76.1752089610-2=3.085757787≈3.0857

04

Conclusion

We need to find the value of the test statistic

t=b1se/Sxx=-5.2640339363.085757787/52.569=-5.2640339360.42559549=-12.36863304≈-12.36

The test statistic's value is t=-12.36, as shown above. The p-value represents the likelihood of seeing a value of tof -12.36or larger in magnitude if the null hypothesis is true, because the test is two-tailed. The P=0.00000170184text is obtained using technology.

Since the p-value=0.00000170184>α=0.05. We do not reject our null hypothesis H0.

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Most popular questions from this chapter

Identify two graphs used in a residual analysis to check the Assumptions 1-3 for regression inferences, and explain the reasoning behind their use:

PCBs and Pelicans. Use the data points given on the WeissStats site for shell thickness and concentration of PCBs for 60 Anacapa pelican eggs referred to in Exercise 14.40.

Suppose that x and y are predictor and response variables, respectively, of a population. Consider the population that consists of all members of the original population that have a specified value of the predictor variable. The distribution, mean, and standard deviation of the response variable for this population are called the______, ______ and _____ respectively, corresponding to the specified value of the predictor variable.

Gas Guzzlers. The data from Exercise 14.41 for gas mileage and engine displacement of 121 vehicles are on the WeissStats site. Specified value of the predictor variable: 3.0L.

a. Decide whether you can reasonably apply the conditional mean and predicted value t-interval procedures to the data. If so, then also do parts (b)-(f).

b. Determine and interpret a point estimate for the conditional mean of the response variable corresponding to the specified value of the predictor variable.

c. Find and interpret a 95%confidence interval for the conditional mean of the response variable corresponding to the specified value of the predictor variable.

d. Determine and interpret the predicted value of the response variable corresponding to the specified value of the predictor variable.

e. Find and interpret a 95%prediction interval for the value of the response variable corresponding to the specified value of the predictor variable.

f. Compare and discuss the differences between the confidence interval that you obtained in part (c) and the prediction interval that you obtained in part (e).

In this Exercise 14.54, we repeat the information from Exercise 14.18.

a. Decide, at the 10%significance level, whether the data provide sufficient evidence to conclude that xis useful for predicting y:

b. Find a 90%confidence interval for the slope of the population regression line.

role="math" localid="1652363608630" x1344y8031 y^=9-2x

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