A manager at a local bank analyzed the relationship between monthly salary (y, in $) and length of service (x, measured in months) for 30 employees. She estimates the following model: Salary = β₀ + β₁Service + ε. The following table summarizes a portion of the regression results. Using the 95% confidence interval, what is the conclusion to the following hypothesis test: H₀: b₁ = 0; H_A: b₁ ≠ 0? A) At the 5% significance level, reject H₀ and conclude that service is significant. B) At the 5% significance level, do not reject H₀ and conclude that service is significant. C) At the 5% significance level, reject H₀ and cannot conclude that service is significant. D) At the 5% significance level, do not reject H₀ and cannot conclude that service is significant.

Question

Quizplus · Accepted Answer

The 95% confidence interval given for the coefficient of service does not contain 0 ($573 to $908), thus we can reject H₀ and conclude that service is significant. Since we reject the null hypothesis, we can also conclude that H₁ ≠ 0. Therefore, choice A is the best answer.

A Manager at a Local Bank Analyzed the Relationship Between