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

question 183

Multiple Choice

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.



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 : $\beta$ ₂ = 0 vs.H₁ : $\beta$ ₂ $\neq$ 0 at the $\alpha$ = 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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