SCENARIO 13-5
a Microeconomist Wants to Determine How Corporate Sales

question 54

Multiple Choice

SCENARIO 13-5
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. SUMMARY OUTPUT
Regression Statistics
$\begin{array} { l l } \text { Multiple R } & 0.830 \\ \text { R Square } & 0.689 \\ \text { Adjusted R Square } & 0.662 \\ \text { Standard Error } & 17501.643 \\ \text { Observations } & 26 \end{array}$
ANOVA
$\begin{array} { l r c c c c } & d f & \text { SS } & \text { MS } & F & \text { Signif } F \\ \text { Regression } & 2 & 15579777040 & 7789888520 & 25.432 & 0.0001 \\ \text { Residual } & 23 & 7045072780 & 306307512 & & \\ \text { Total } & 25 & 22624849820 & & & \end{array}$


$\begin{array}{lrrrr} & \text { Coeff } & \text { StdError } & t \text { Stat } & \text { P-value } \\\text { Intercept } & 15800.0000 & 6038.2999 & 2.617 & 0.0154 \\\text { Capital } & 0.1245 & 0.2045 & 0.609 & 0.5485 \\\text { Wages } & 7.0762 & 1.4729 & 4.804 & 0.0001\end{array}$

-Referring to SCENARIO 13-5, at the 0.01 level of significance, what conclusion should the microeconomist reach 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 less than 0.01.
• B)Capital is significant in explaining corporate sales and should be included in the model because its p-value is more 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 less than 0.01.
• D)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.

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Definitions:

Government

The system or group of people governing an organized community, often a state.

Unionization

The process of organizing workers into a union, a group that collectively negotiates with employers for wages, hours, and other conditions of employment.

Finance

The administration of substantial sums of money, particularly by large corporations or government bodies.

Manufacturing

The process of producing goods using labor, machines, tools, and chemical or biological processing or formulation.