Econometrics Final Exam - Problem no 1.docx

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Problem  no 1

a)

Ho :β1= 0 à the influence of TV advert expenditures in month t-1 on monthly sales in month t is not significant at 5% significance level

H1 : β1 0 à the influence of TV advert expenditures in month t-1 on monthly sales in month t is significant at 5% significance level

 

b)

·         Test statistic:

ti= b1S(b1)= 42.231.709=24.71

·         Critical value:

t∝,n-k =t0.05, 20-4=2.1199

c)

Rejection rule:

Reject Ho if  ti>tα

d)

Conclusion:

|24.71| > 2.1199, so we reject Ho

At 5% significance level we reject the null hypothesis, that the influence of TV advert expenditures in month t-1 on monthly sales in month t is not significant.

 

 

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