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But, if we were to repeat this exercise of estimating the value of ? using many more samples, we would expect the value of ? to be zero on average. However, we have only one sample of a certain number of firms (say, 30 firms) and we have to make an inference from this one sample whether X influences Y (i...
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? ? 0) or X does not influence Y (i.e. ? = 0). How do we make such an inference? Testing whether ? = 0 or ? ? 0 is called the Test of Significance. In other words, we are trying to test if the independent variable X (average height in our example) is significant in explaining (or determining) what the value of Y (sales) would be...
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