A p-value of 89% for the slope coefficient in a regression of a cost driver against a cost indicates:
A) The true variable costs are statistically significantly different from zero
B) There is only an 11% chance the true variable costs are zero
C) The relationship between the cost and the cost driver is nonlinear
D) None of the above

Question

Quizplus · Accepted Answer

A p-value of 89% indicates that there is not enough evidence to reject the null hypothesis that the slope coefficient is equal to zero. Therefore, we cannot conclude that the true variable costs are statistically significantly different from zero or that there is only an 11% chance the true variable costs are zero. The p-value does not provide any information on the linearity of the relationship between the cost and the cost driver.

A P-Value of 89% for the Slope Coefficient in a Regression