TABLE 14-4 A Real Estate Builder Wishes to Determine How House Size

question 82

Multiple Choice

TABLE 14-4
A real estate builder wishes to determine how house size (House) is influenced by family income (Income) and family size (Size) .House size is measured in hundreds of square feet and income is measured in thousands of dollars.The builder randomly selected 50 families and ran the multiple regression.Partial Microsoft Excel output is provided below: Also SSR (X₁ ∣ X₂) = 36400.6326 and SSR (X₂ ∣ X₁) = 3297.7917
-Referring to Table 14-4,at the 0.01 level of significance,what conclusion should the builder draw regarding the inclusion of Size in the regression model?

• A)Size is significant in explaining house size and should be included in the model because its p-value is less than 0.01.
• B)Size is significant in explaining house size and should be included in the model because its p-value is more than 0.01.
• C)Size is not significant in explaining house size and should not be included in the model because its p-value is less than 0.01.
• D)Size is not significant in explaining house size and should not be included in the model because its p-value is more than 0.01.

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Definitions:

Contribution Margin

The difference between the sales revenue and variable costs of a product, indicating how much contributes to covering fixed costs and earning profit.

Contribution Margin

The residual amount from sales income following the deduction of variable expenses, allocated for covering fixed costs and producing profit.

Variable Costs

Expenses that vary in relation to the amount of production or business activity.

Fixed Costs

Costs that do not change with the level of output produced, such as rent and salaries.