The demand model relating the quantity of good XYZ sold (QXYZ) to the price of g

Question

The demand model relating the quantity of good XYZ sold (QXYZ) to the price of good (PXYZ) is reported below:

QXYZ = 4.46 + .304 PXYZ

Coefficient      Standard Error

4.46                 3.04

.304                 .3243

Analysis of Variance:

Source             DF                   Sum of Squares

Regression                                   141.9

Residual                                   3718.9

Total                24

Refer to this scenario What is the t-statistic for the slope coefficient?

3.04

0.94

0.30

4.46

Refer to the previous scenario, is the slope coefficient statistically different from zero?

Yes

No

Inconclusive

None of the above

Explanation / Answer

QXYZ = 4.46 + 0.304 PXYZ

slope coeffcient=0.304

standard error of slope coefficient (SE) =0.3243

t statistic=slope coefficient/SE

              =0.304/0.3243

               =0.94

Null hpothesis: slope coefficient is 0

Let level of significance be 5% (two table)

From anova table, degress of freedom of total sum of squares=24=n-1;where n is no of observations

n-1=24

From t table, critical value of t at 5% significance and 24 degrees of freedom is 2.064

Since t calculated(0.94)<t critical(2.064)

We do not reject null hypothesis

So slope coefficient is not statistically different from 0.

Answer is NO.

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.