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

question 168

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, at the 0.01 level of significance, what conclusion should the builder draw regarding the inclusion of Size in the regression model?

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

Calculate future consumption or savings outcomes given changes in economic variables such as income, interest rates, and inflation.

Understand and predict the effects of storage and loss on future consumption in resource management scenarios.

Determine the equilibrium interest rate that balances consumption across different periods given a specific utility function.

Understand basic mathematical operations and their applications.

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