A multiple regression model is developed in order to study t

A multiple regression model is developed in order to study the relationship between the number of power outages that occur in a rural town per year (y) and two independent variables: the distance of that town from a major metropolitan area (xj) and the amount spent on utilities each year for that town (x2). lambda=beta0+beta1x1+beta2x2+epsilon A sample of 50 rural towns is collected. For each town, the distance (in hundreds of miles) of the town from a major metropolitan area and the amount spent (in hundreds of thousands of dollars) on utilities that year are recorded. Also, the number of reported power outages is recorded. The following regression equation was developed: y=10+1.2x1-2.7x2 A t test is to be conducted in order to assess the significance of distance from a major metropolitan area in predicting number of power outages. Select whether the following statements about the test are true or false:

Solution

a)

TRUE.

This is because B1 is the coefficient of x1, the distance from a major metropolitan area.

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b)

As df = n - 2, and n = 50,

df= 50 - 2 = 48. [TRUE, ANSWER]

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c)

TRUE.

This is because we do not assume anything about the sign of B1, we just car if it is 0 or not.