Question

1. What statistic and p-value would you use to test the specific null hypothesis that:

Ho: b _{Paper Ads} = b _{TV Ads} = 0

    Do you reject or fail to reject this null hypothesis?

1. 2. If I asked you to consider a “backward selection” approach which only included predictors to the model that were significant at a 99% level, then would your answer to part “a” change? If so, what would it change to?

2. Market	Revenue	Paper Ads (X1)	TV Ads (X2)
   Augusta	99.3	3.1	4.1
   Baton Rouge	198.0	6.9	5.8
   Biloxi	120.2	3.5	2.3
   Birmingham	166.4	4.3	4.3
   Jackson	74.8	4.0	1.5
   Little Rock	137.8	3.6	4.0
   Mobile	90.8	5.0	1.5
   New Orleans	237.8	5.0	8.4
   Savannah	147.0	4.4	2.7
   Shreveport	56.5	3.0	3.0
   Tunica	78.8	1.9	4.4
   Vicksburg	100.5	2.7	2.9

Answer 1

1. The t-statistic and p-value would be used here.

Reject this null hypothesis. (p < .05)

Source	SS	df	MS	F	p-value
Regression	26,478.0136	2	13,239.0068	20.79	.0004
Residual	5,731.5756	9	636.8417
Total	32,209.5892	11

2. TV Ads would be the included predictor to the model that is significant at a 99% level.

variables	coefficients	std. error	t (df=9)	p-value
Intercept	-18.2324
Paper Ads (X1)	19.6452	6.1132	3.214	.0106
TV Ads (X2)	17.7172	4.1385	4.281	.0020