Question 8
The Following Comprehension and Related Questions are Purely Hypothetical
A company has collected data on the average monthly electricity consumed for air conditioning (dependent variable) relative to (i) Average ambient temperature of the month, (ii) Total number of working days in the month and (iii) Average number of employees who have worked in that month. This data is provided in Table-1. Additionally, the correlation matrix for the different variables in Table-1 is provided in Figure-1. Given this information, answer the given subquestions.
| Average Electricity Consumed (in KW) | Average ambient temperature (in Celsius) | Total Number of Working Days (in count) | Average Number of Employees who have Worked (in count) |
|---|---|---|---|
| 250 | 30 | 24 | 91 |
| 237 | 31 | 25 | 90 |
| 272 | 45 | 24 | 88 |
| 274 | 60 | 25 | 87 |
| 298 | 65 | 25 | 91 |
| 301 | 72 | 26 | 94 |
| 300 | 80 | 25 | 87 |
Table-1: Electricity consumption data
| Average Electricity Consumed | Average ambient temperature | Total Number of Working Days | Average Number of Employees who have Worked | |
|---|---|---|---|---|
| Average Electricity Consumed | 1 | |||
| Average ambient temperature | 0.95 | 1 | ||
| Total Number of Working Days | 0.52 | 0.63 | 1 | |
| Average Number of Employees who have Worked | 0.1 | -0.06 | 0.44 | 1 |
Figure-1: Correlation Matrix for Data in Table-1
Based on the expected percentage inflation (increase) in the standard error of the beta value corresponding to “Average Number of Employees who have Worked” due to “Total Number of Working Days” if a model with only these two variables is built for predicting “Average Electricity Consumed”, which of the following statements is/are TRUE (choose all that is applicable)?
The t-statistic corresponding to the “Beta value of Average Number of Employees who have Worked” will increase. Hence, the corresponding NULL HYPOTHESIS will be REJECT
The t-statistic corresponding to the “Beta value of Average Number of Employees who have Worked” will increase. Hence, the corresponding NULL HYPOTHESIS will NOT BE REJECTED
The t-statistic corresponding to the “Beta value of Total Number of Working Days” will increase. Hence, the corresponding NULL HYPOTHESIS will be REJECT
The t-statistic corresponding to the “Beta value of Total Number of Working Days” will increase. Hence, the corresponding NULL HYPOTHESIS will NOT be REJECT