TABLE 14-6 One of the Most Common Questions of Prospective House Buyers

question 155

Multiple Choice

TABLE 14-6
One of the most common questions of prospective house buyers pertains to the cost of heating in dollars (Y) .To provide its customers with information on that matter,a large real estate firm used the following 2 variables to predict heating costs: the daily minimum outside temperature in degrees of Fahrenheit (X₁) and the amount of insulation in inches (X₂) .Given below is EXCEL output of the regression model. Also SSR (X₁ ∣ X₂) = 8343.3572 and SSR (X₂ ∣ X₁) = 4199.2672
-Referring to Table 14-6,what is your decision and conclusion for the test H₀ : β₂ = 0 vs.H₁ : β₂ ≠ 0 at the α = 0.01 level of significance?

• A)Do not reject H₀ and conclude that the amount of insulation has a linear effect on heating costs.
• B)Reject H₀ and conclude that the amount of insulation does not have a linear effect on heating costs.
• C)Reject H₀ and conclude that the amount of insulation has a linear effect on heating costs.
• D)Do not reject H₀ and conclude that the amount of insulation does not have a linear effect on heating costs.

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