TABLE 14-5
a Microeconomist Wants to Determine How Corporate Sales

question 21

Multiple Choice

TABLE 14-5
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.
$$\begin{array}{l}\text { Regression Statistics }\\\begin{array} { l r } \hline \text { Multiple R } & 0.830 \\\text { R Square } & 0.689 \\\text { Adjusted R Square } & 0.662 \\\text { Standard Error } & 17501.643 \\\text { Observations } & 26\end{array}\end{array}$$

ANOVA
$\begin{array}{lcrrrr}\hline & \text { d f }&\text { S S } & \text { M S } & \text { F }&\text { Significance F } \\\hline \text {Regression} & 2 & 15579777040 & 7789888520 & 25.432 & 0.0001 \\\text {Residual }& 23 & 7045072780 & 306307512 & & \\\text {Total }& 25 & 22624849820 & & & \\\hline\end{array}$

$$\begin{array} { l c c c c } & \text { Coefficients } & \text { Standard Error} & \text { t Stat } & \text { p-value } \\\text { Intercept } & 15800.0000 & 6038.2999 & 2.617 & 0.0154 \\\text { C apital } & 0.1245 & 0.2045 & 0.609 & 0.5485 \\\text { W ages } & 7.0762 & 1.4729 & 4.804 & 0.0001 \\\hline\end{array}$$

-Referring to Table 14-5, at the 0.01 level of significance, what conclusion should the microeconomist draw regarding the inclusion of Capital in the regression model?

• A) Capital is significant in explaining corporate sales and should be included in the model because its p-value is more than 0.01.
• B) Capital is not significant in explaining corporate sales and should not be included in the model because its p-value is less than 0.01.
• C) Capital is not significant in explaining corporate sales and should not be included in the model because its p-value is more than 0.01.
• D) Capital is significant in explaining corporate sales and should be included in the model because its p-value is less than 0.01.

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