A function is estimated as C=-3.7744+.9085M. The standard error on the coefficie

Question

A function is estimated as C=-3.7744+.9085M. The standard error on the coefficient on M is .0076. Observations=100. Suppose the null hypothesis is that Beta1=1. I know the letter answer I just don't know how to get it.

A. One can't reject this null hypotheiss at the 5% significance level.

B. One can reject this null hypotheiss at the 5% significance level.

C. One can accept this null hypotheiss at the 5% significance level

D. One can accept the alternative hypothesis at the 5% significane level.

Explanation / Answer

degree of freedom =n-2=98

for 98 df and 0.05 level critical value of t =-/+ 1.98

here test statsitic t=(b1-mean)/std error =(0.9085-1)/0.0076=-12.04

as test statsitic is in critical region theefore we reject null hypothesis

B. One can reject this null hypotheiss at the 5% significance level.

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