The owner of an ice cream shop wants to determine whether there is a relationshi

Question

The owner of an ice cream shop wants to determine whether there is a relationship between ice cream sales and temperature. The owner collects data on temperature and sales for a random sample of 30 days and runs a regression to determine if there is a relationship between temperature (in degrees) and ice cream sales. The p-value for the two-sided hypothesis test is 0.04. How would you interpret the p-value?

1)If there is no relationship between temperature and sales, the chance of selecting a sample this extreme would be 4%.

2)If there is a relationship between temperature and sales, the chance of seeing a regression coefficient this large would be 4%.

3)There is a 4% chance that there is a relationship between temperature and revenue.

4)There is a 4% chance that there is no relationship between temperature and revenue.

Explanation / Answer

Assume the hypotheses to be as follows:

H0:beta1=0 (temperature is not useful for predicting ice-cream sales)

H1:beta1=/=0 (temperature is useful for predicting ice-cream sales)

The p value is: 0.04.

The p value refer to probability of obtaining the observed result or more extreme than what is observed, assuming the null hypothesis to be true. Therefore, assuming null hypothesis to be true, that is temperature is not useful for predicting ice-cream sales, there is a 4% chance that there is a relationship between the variables. Ans> 3

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