Question

Use Problem #5 to test the hypothesis that there is no correlation between advertising and sales. In rejecting this hypothesis, you wish to be 80% confident. Hints: Tcalc and Tcrit

From #5: r= -0.8490, n=5

Answer 1

Step 1: writing Hypothesis

Claim : There is no correlation between advertising and sales.

Hypothesis :

H0: There is no correlation between advertising and sales.

H1: There is correlation between advertising and sales

In notation :       Vs       

Test statistics :

                 where              and r = -0.8490, n = 5

   plug values in formula and find value of t .

           

tcal = -2.786

Critical values :

Here given confidence level = 80%=0.80.

To fond critical value we need two values confidence level =0.80 and degrees of freedom = n-2=3.

Here test is two tailed test so we get two critical values, also two critical regions .

Lets use t distribution table.

Also we have two critical region .

Decision :

So here tcal values falles in critical region( rejection region) since reject H0 .

Conclusion: Here reject H,so we conclude that there is correlation between Advertising and sales .