SCENARIO 13-4
a Real Estate Builder Wishes to Determine How

question 158

Multiple Choice

SCENARIO 13-4
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: $\begin{array}{lr}\hline{\text { Regression Statistics }} \\\hline \text { Multiple R } & 0.8479 \\\text { R Square } & 0.7189 \\\text { Adjusted R Square } & 0.7069 \\\text { Standard Error } & 17.5571 \\\text { Observations } & 50\\\hline \end{array}$

$\text { ANOVA }$
$\begin{array}{lrrrrr} & d f & \text { SS } & {M S} & F & \text { Significance } F \\\hline \text { Regression } & & & 37043.3236 & 18521.6618 & 0.0000 \\\text { Residual } & & 14487.7627 & 308.2503 & \\\text { Total } & & 49 & 51531.0863 & &\end{array}$

$\begin{array}{lrrrr}\hline & \text { Coefficients } & \text { Standard Error } &{t \text { Stat }} & \text { P-value } \\\hline \text { Intercept } & -5.5146 & 7.2273 & -0.7630 & 0.4493 \\\text { Income } & 0.4262 & 0.0392 & 10.8668 & 0.0000 \\\text { Size } & 5.5437 & 1.6949 & 3.2708 & 0.0020\\\hline \end{array}$

$\text { Also } \operatorname{SSR}\left(X_{1} \mid X_{2}\right) =36400.6326 \text { and } \operatorname{SSR}\left(X_{2} \mid X_{1}\right) =3297.7917$


-Referring to SCENARIO 13-4, which of the following values for the level of significance is the smallest for which at most one explanatory variable is significant individually?

• A)0.001
• B)0.010
• C)0.025
• D)0.050

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Definitions:

Equity

The value of ownership interest in a company, represented by the amount of assets minus liabilities.

Adjusting Entries

Entries made in accounting records at the end of an accounting period to update the balances of accounts in the preparation of financial statements.

Accounting Period

A specific time period during which financial transactions are recorded and financial statements are prepared.

Current Assets

Assets expected to be converted into cash, sold, or consumed within a year or the operating cycle, whichever is longer.