Compute the test statistic for the overall f-test


Perform the overall F-test for this model, i.e. state the null and alternate hypothesis, compute the test statistic for the overall F-test, and make a decision to "reject " or "fail to reject" the null hypothesis. Test the statistical significance of the overall F-test using a critical value for alpha=0.05 from Table A.4 on page 376 in Regression Analysis By Example.

Using the F-test to the hypothesis that all predictor variables have no explanatory power and all their regression coefficients are zero. So, the hypotheses become:

H0: Y = B0
H1: Y = B0 = B1X1 + B1X2 + e
a = .05

MSR = SSR/df = 750/50 = 15
F Statistic = MSR/ MSE = 15/5.2083 = 2.88

Since the observed F-value of 2.88 is less than the crucial value for alpha .05 of 3.15 we do not reject the null hypothesis and assume the predictor variables do have explanatory power.

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