a) What kind of relationship exist between the exam scores and the clas sizes? Interpret the regression. b) Conduct the following hypothesis test at the 1% significance level: H0 : b1 ≥ 0 H1 : b1 < 0 In your answer draw the distribution of the test statistic that you use, and clearly define the rejection region(s), indicating the critical value(s).
Correlation
Correlation defines a relationship between two independent variables. It tells the degree to which variables move in relation to each other. When two sets of data are related to each other, there is a correlation between them.
Linear Correlation
A correlation is used to determine the relationships between numerical and categorical variables. In other words, it is an indicator of how things are connected to one another. The correlation analysis is the study of how variables are related.
Regression Analysis
Regression analysis is a statistical method in which it estimates the relationship between a dependent variable and one or more independent variable. In simple terms dependent variable is called as outcome variable and independent variable is called as predictors. Regression analysis is one of the methods to find the trends in data. The independent variable used in Regression analysis is named Predictor variable. It offers data of an associated dependent variable regarding a particular outcome.
Suppose you estimated the relationship between the exam scores and class sizes.
score^ = b0 + b1*Size + e^
Based on the OLS estimate, you obtain the following standard errors and parameter estimates:
b0= 95; se(b0) = 30 ; b1= −1.2; se(b1 ) = 0.4 ; n = 25
a) What kind of relationship exist between the exam scores and the clas sizes? Interpret the regression.
b) Conduct the following hypothesis test at the 1% significance level:
H0 : b1 ≥ 0
H1 : b1 < 0
In your answer draw the distribution of the test statistic that you use, and clearly define the rejection region(s), indicating the critical value(s).
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