Instruction 13.17
A microeconomist wants to determine how corporate sales are influenced by capital and wage spending by companies. She proceeds to randomly select 26 large corporations and record information in millions of dollars. The Microsoft Excel output below shows results of this multiple regression.
Note: Adj. R Square = Adjusted R Square; Std. Error = Standard Error
-Referring to Instruction 13.17,when the microeconomist used a simple linear regression model with sales as the dependent variable and wages as the independent variable,he obtained an r² value of 0.601.What additional percentage of the total variation of sales has been explained by including capital spending in the multiple regression?

Question

Instruction 13.17
A microeconomist wants to determine how corporate sales are influenced by capital and wage spending by companies. She proceeds to randomly select 26 large corporations and record information in millions of dollars. The Microsoft Excel output below shows results of this multiple regression.

Note: Adj. R Square = Adjusted R Square; Std. Error = Standard Error
-Referring to Instruction 13.17,when the microeconomist used a simple linear regression model with sales as the dependent variable and wages as the independent variable,he obtained an r² value of 0.601.What additional percentage of the total variation of sales has been explained by including capital spending in the multiple regression?

Quizplus · Accepted Answer

The r² value of 0.601 indicates that 60.1% of the variation in sales is explained by wages alone. If including capital spending in the multiple regression explains an additional 8.8% of the variation, then the total variation explained by both variables would be 68.9%.

Instruction 13.17 A Microeconomist Wants to Determine How Corporate Sales Are Influenced