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

question 295

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, when the microeconomist used a simple linear regression model with sales as the dependent variable and wages as the independent variable, she obtained an r2 value of 0.601.What additional percentage of the total variation of sales has been explained by including capital spending in the multiple regression?

• A)60.1%
• B)31.1%
• C)22.9%
• D)8.8%

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