Exhibit 15-2
A regression model between sales (Y in $1,000), unit price (X 1 in dollars) and television advertisement (X 2 in dollars) resulted in the following function: For this model SSR = 3500, SSE = 1500, and the sample size is 18.
-Refer to Exhibit 15-2. To test for the significance of the model, the test statistic F is
A)2.33
B)0.70
C)17.5
D)1.75

Question

Exhibit 15-2
A regression model between sales (Y in $1,000), unit price (X 1 in dollars) and television advertisement (X 2 in dollars) resulted in the following function:  For this model SSR = 3500, SSE = 1500, and the sample size is 18.
-Refer to Exhibit 15-2. To test for the significance of the model, the test statistic F is
A)2.33 
B)0.70 
C)17.5 
D)1.75

Quizplus · Accepted Answer

To test for the significance of the model, we use the F-test: F = (SSR / k) / (SSE / (n - k - 1)), where k is the number of independent variables (in this case, 2).

Plugging in the values from the question, we get:
F = (3500 / 2) / (1500 / 15) = 17.5

Comparing this result to the F-distribution with (2, 15) degrees of freedom at the 5% significance level, we find that the critical value is 3.68. Since 17.5 is greater than 3.68, we reject the null hypothesis and conclude that the model is significant.

Exhibit 15-2 A Regression Model Between Sales (Y in $1,000), Unit Price