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Sent to General Experts April 13 2006 at 4:55 PM
   

Please answer the following questions. I have answered some based on the question. Please correct if wrong and answer all the questions please.
Question:
As CEO of a large corporation, you are interested in the relationship of funds expended in research and corporate profit. The results are: p = .0013 and r = .91

a.     What is the independent and dependent variable ?

The independent variable would be the funds.
The dependent variable would be research and profits


b. What are the hypotheses ?

Null: Research and corporate profits have a direct relationship with funds expended.
Alternative: Research and corporate profits do not have a direct relationship with funds expended.


c.     What is your decision ?Accept the hypothesis or reject, why?

d. What percent of the variance in profit is accounted for by the variation spent on research ?

e. What percent of the variance in profit is not accounted for by the variation spent on research?

f. As the relationship deteriorates from a perfect correlation, what happens to the points on a scatter diagram ?

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Answer
April 13 2006 at 7:04 PM (2 hours and 8 minutes and 58 seconds later)
         
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a. What is the independent and dependent variable?

There are two variables involved. The independent variable is
"funds expended in research" and the dependent variable is
"corporate profit".

b. What are the hypotheses?

Null hypothesis: There is no linear relationship between funds
expended in research and corporate profit.

Alternative hypothesis: There is a linear relationship between
funds expended in research and corporate profit.

c. What is your decision? Accept the hypothesis or reject, why?

Reject the null hypothesis and accept the alternative
hypothesis because the P-value (0.0013) is extremely low.

d. What percent of the variance in profit is accounted for by
the variation spent on research ?

r-squared = (0.91)2 = 0.8281 = 82.81%

e. What percent of the variance in profit is not accounted for
by the variation spent on research?

100 - 82.81 = 17.19%

f. As the relationship deteriorates from a perfect correlation,
what happens to the points on a scatter diagram ?

They deviate from a straight line pattern.

(Perfect correlation is when all the points lie exactly on a
straight line.)



Edited by gnut on April 13 2006 at 7:11 PM
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