Business Statistics

Chapter 15 | Multiple Regression Analysis 535

So, with the interaction term the new regression model will be as follows:

y

i

= 

0

+ 

1

x

1

+ 

2

x

2

+ 

3

x

3

+ 

i

In order to assess the significant contribution of the interaction term to the regression model, we

can set null and alternative hypotheses as

H

0

: 

3

= 0 (There is interaction effect)

H

1

: 

3

 0 (There is no interaction effect)

Figure 15.41 is the MS Excel output for Example 15.3 with the interaction term.

From the output with interaction term (Figure 15.41), we can see that the p value for interaction

between age and gender is 0.2578. This is an indication of the rejection of the alternative ...