When a Regression Model Was Developed Relating Sales (Y) of a Company

question 29

Essay

When a regression model was developed relating sales (Y) of a company to its product's price (X₁), the SSE was determined to be 495. A second regression model relating sales (Y) to product's price (X₁) and competitor's product price (X₂) resulted in an SSE of 396. At $\alpha$ = 0.05, determine if the competitor's product's price contributed significantly to the model. The sample size for both models was 33.

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Definitions:

Expected Frequency

The predicted number of times an outcome is expected to occur in a statistical experiment, based on theoretical probability distribution.

Significance Level

The threshold used in statistical testing to determine if a result is statistically significant, commonly set at 0.05, indicating a 5% risk of concluding an effect exists when it does not.

Z-Test

A statistical test used to determine whether two population means are different when the variances are known and the sample size is large.

Degrees of Freedom

The total number of independent pieces of information that went into the estimation of a parameter or the calculation of a statistic.