TABLE 14-4
a Real Estate Builder Wishes to Determine How

question 22

Multiple Choice

TABLE 14-4
A real estate builder wishes to determine how house size (House) is influenced by family income (Income) , family size (Size) , and education of the head of household (School) . House size is measured in hundreds of square feet, income is measured in thousands of dollars, and education is in years. The builder randomly selected 50 families and ran the multiple regression.
Microsoft Excel output is provided below:
$\begin{array}{ll} & \text { Regression Stuistics } \\\hline \text { Multiple R } & 0.865 \\\text { R Square } & 0.748 \\\text { Adjusted R Square } & 0.726 \\\text { Standard Error } & 5.195 \\\text { Observations } &50 \\\hline\end{array}$
ANOVA
$\begin{array}{lrrrrr}\hline & \text { d f }& \text {S S } & \text {M S } & \text {F } & \text {Significance F } \\\hline \text {Regression} & & 3605.7736 & 1201.9245 & &0.0000 \\\text {Residual} & & 1214.2264 & 26.3962 & \\Total & 49 & 4820.0000 & & & \\\hline\end{array}$

$\begin{array}{lcccc}\hline & \text { Coefficients} & \text {Standard Error} & \text {t Stat }& \text {p -value} \\\hline \text {Intercept }& -1.6335 & 5.8078 & -0.281 & 0.7798 \\ \text {Income} & 0.4485 & 0.1137 & 3.9545 & 0.0003 \\ \text {Size} & 4.2615 & 0.8062 & 5.286 & 0.0001 \\ \text {School }& -0.6517 & 0.4319 & -1.509 & 0.1383 \\\hline\end{array}$

-Referring to Table 14-4, at the 0.01 level of significance, what conclusion should the builder draw regarding the inclusion of School in the regression model?

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

Hierarchy

A system or organization in which people or groups are ranked one above the other according to status or authority.

Centralization

The concentration of decision-making authority at the upper levels of an organization.

Specialization

The process of focusing on and becoming expert in a specific area of knowledge or activity.

Differentiation

The process of identifying and emphasizing the unique characteristics or features of a person, product, or organization.