A Financier Whose Specialty Is Investing in Movie Productions Has

question 23

Essay

A financier whose specialty is investing in movie productions has observed that,in general,movies with "big-name" stars seem to generate more revenue than those movies whose stars are less well known.To examine his belief he records the gross revenue and the payment (in $ millions)given to the two highest-paid stars in the movie for ten recently released movies.
$$\begin{array} { | c | c | c | } \hline \text { Movie } & \text { Cost of Twa Highest } & \text { Gross ravanue } \\&\text { Paid Stars }&\\\hline 1 & 5.3 & 4 8 \\2 & 7.2 & 65 \\3 & 1.3 & 1 8 \\4 & 1.8 & 20 \\5 & 3.5 & 31 \\6 & 2.6 & 26 \\7 & 8.0 & 73 \\8 & 2.4 & 23 \\9 & 4.5 & 39 \\10 & 6.7 & 5 8 \\\hline\end{array}$$ Assume that the conditions for the conducting tests of hypotheses for $\rho$ and $\rho$ ₁ (the two tests are identical)are not met.Do the data allow us to infer at the 5% significance level that payment to the two highest paid stars and gross revenue are linearly related?

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Definitions:

Competitive Markets

Markets where many buyers and sellers trade goods and services under conditions of few restrictions, leading to the best prices for both parties.

Opportunity Cost

The advantage lost by selecting one option instead of another.

Full-tuition Scholarships

Financial awards covering the entire cost of tuition for students, often based on academic merit, need, or other criteria, provided by educational institutions or donors.

Comparative Advantage

The ability of a country or individual to produce a particular good or service at a lower opportunity cost than others, leading to more efficient international trade.