Question

A large national bank charges local companies for using their services. A bank official reported the results of a regression analysis designed to predict the bank's charges (y), measured in dollars per month, for services rendered to local companies. One independent variable used to predict service charge to a company is the company's sales revenue (x), measured in $ million. Data for 21 companies who use the bank's services were used to fit the model

E(y) = β₀ + β₁x.

The results of the simple linear regression are provided below.

= 2,700 + 20x, s = 65, 2-tailed p-value = .064 (for testing β₁)

Interpret the p-value for testing whether β₁ exceeds 0.

Question 4 options:

	For every $1 million increase in sales revenue (x), we expect a service charge (y) to increase $.064.
	Sales revenue (x) is a poor predictor of service charge (y).
	There is sufficient evidence (at α = .05) to conclude that service charge (y) is positively linearly related to sales revenue (x) .
	There is insufficient evidence (at α = .05) to conclude that service charge (y) is positively linearly related to sales revenue (x).

Answer 1

since p value for one tail =0.064/2 =0.032 >0.05

There is sufficient evidence (at α = .05) to conclude that service charge (y) is positively linearly related to sales revenue (x)