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

question 302

Short Answer

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, the partial F test forH0: Variable X1 does not significantly improve the model after variable X2 has been includedH1: Variable X1 significantly improves the model after variable X2 has been included has and degrees of freedom.

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Definitions:

Money Income

The total amount of monetary earnings or receipts a person or household receives within a specific period.

Utility-Maximizing

The behavior or principle where individuals or entities choose options that increase their satisfaction or utility to the greatest extent.

Marginal Utility

The additional satisfaction gained from consuming an additional unit of a good or service.

Hypothetical Consumer

A theoretical or model consumer whose purchasing decisions and behavior are used to analyze the demand side of the market.