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SCENARIO 14-6
One of the Most Common Questions of Prospective β\beta

question 183

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SCENARIO 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 ( X 2 ) . Given below is EXCEL output of the regression model.
SCENARIO 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 ( X<sub>1</sub> ) and the amount of insulation in inches ( X <sub>2</sub> ) . Given below is EXCEL output of the regression model. Also SSR (X<sub>1</sub> | X<sub>2</sub>) = 8343.3572 and SSR (X<sub>2</sub> | X<sub>1</sub>) = 4199.2672 -Referring to Scenario 14-6,what is your decision and conclusion for the test H<sub>0 </sub>: \beta <sub>2</sub> = 0 vs.H<sub>1 </sub>: \beta <sub>2</sub> \neq 0 at the \alpha = 0.01 level of significance? A) Do not reject H<sub>0</sub> and conclude that the amount of insulation has a linear effect on heating costs. B) Reject H<sub>0</sub> and conclude that the amount of insulation does not have a linear effect on heating costs. C) Reject H<sub>0</sub> and conclude that the amount of insulation has a linear effect on heating costs. D) Do not reject H<sub>0</sub> and conclude that the amount of insulation does not have a linear effect on heating costs.
SCENARIO 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 ( X<sub>1</sub> ) and the amount of insulation in inches ( X <sub>2</sub> ) . Given below is EXCEL output of the regression model. Also SSR (X<sub>1</sub> | X<sub>2</sub>) = 8343.3572 and SSR (X<sub>2</sub> | X<sub>1</sub>) = 4199.2672 -Referring to Scenario 14-6,what is your decision and conclusion for the test H<sub>0 </sub>: \beta <sub>2</sub> = 0 vs.H<sub>1 </sub>: \beta <sub>2</sub> \neq 0 at the \alpha = 0.01 level of significance? A) Do not reject H<sub>0</sub> and conclude that the amount of insulation has a linear effect on heating costs. B) Reject H<sub>0</sub> and conclude that the amount of insulation does not have a linear effect on heating costs. C) Reject H<sub>0</sub> and conclude that the amount of insulation has a linear effect on heating costs. D) Do not reject H<sub>0</sub> and conclude that the amount of insulation does not have a linear effect on heating costs.
SCENARIO 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 ( X<sub>1</sub> ) and the amount of insulation in inches ( X <sub>2</sub> ) . Given below is EXCEL output of the regression model. Also SSR (X<sub>1</sub> | X<sub>2</sub>) = 8343.3572 and SSR (X<sub>2</sub> | X<sub>1</sub>) = 4199.2672 -Referring to Scenario 14-6,what is your decision and conclusion for the test H<sub>0 </sub>: \beta <sub>2</sub> = 0 vs.H<sub>1 </sub>: \beta <sub>2</sub> \neq 0 at the \alpha = 0.01 level of significance? A) Do not reject H<sub>0</sub> and conclude that the amount of insulation has a linear effect on heating costs. B) Reject H<sub>0</sub> and conclude that the amount of insulation does not have a linear effect on heating costs. C) Reject H<sub>0</sub> and conclude that the amount of insulation has a linear effect on heating costs. D) Do not reject H<sub>0</sub> and conclude that the amount of insulation does not have a linear effect on heating costs.
Also SSR (X1 | X2) = 8343.3572 and SSR (X2 | X1) = 4199.2672
-Referring to Scenario 14-6,what is your decision and conclusion for the test H0 : β\beta 2 = 0 vs.H1 : β\beta 2 ≠\neq 0 at the α\alpha = 0.01 level of significance?

Definitions:

Accounting Period

A specific time period for which financial information is reported, commonly a year or a quarter.

Calendar Year

A period of time that starts on January 1 and ends on December 31, used for accounting and official purposes.

Debit Part

The left side of an accounting entry, which increases assets and expenses and decreases liabilities and equity.

Journal Entry

A recording of a business transaction in an accounting journal, indicating the financial effects of the transaction.

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