Description

(First Example)

The standard error of this estimated coefficient is 32.78

The standard error= estimated coefficient/ t-statistic

SE= -413/-12.6

(Second example)

Suppose we had another focus group sample, ran a regression on that sample, and obtained the same coefficient on price but with a standard error 10 times as large. The standard error would be 327.78 and the new t-statistic would be -1.26. The price coefficient wouldn’t be statistically significant because the p-value is higher than 0.05 (5%).

* Why is statistical significance of the price coefficient important in the second example?

* What can you say about the statistical significance of the price coefficient in this second sample?

*Does both examples results are important for making a decision?