Question: A researcher wishes to test the hypothesis that output per employee (Y/L) is related to investment per employee (I/L) and has attained the following data for 10 companies. Answer all parts of this question:

(a) Show how the researcher should set out the null hypothesis and the alternative hypothesis.

b) Calculate Pearson’s correlation coefficient for output per employee (Y/L) and investment per employee (I/L).

c) Using the t-statistic for Pearson’s correlation coefficient comment on the degree of statistical significance of the correlation coefficient attained in part (b).

d) On the basis of your results what advice would you give to companies that wished to increase output per employee?