TABLE 14-6 One of the Most Common Questions of Prospective House Buyers

question 141

Multiple Choice

TABLE 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 4 variables to predict heating costs: the daily minimum outside temperature in degrees of Fahrenheit (X₁) the amount of insulation in inches (X₂) , the number of windows in the house (X₃) , and the age of the furnace in years (X₄) . Given below are the Excel outputs of two regression models.
Model 1

Model 2

-Referring to Table 14-6 and allowing for a 1% probability of committing a type I error, what is the decision and conclusion for the test H₀: β₁ = β₂ = β₃ = β₄ = 0 vs. H₁: At least one βⱼ ≠ 0, j = 1,2,..., 4 using Model 1?

• A) Do not reject H₀ and conclude that the 4 independent variables have significant individual linear effects on heating costs.
• B) Reject H₀ and conclude that the 4 independent variables taken as a group have significant linear effects on heating costs.
• C) Do not reject H₀ and conclude that the 4 independent variables taken as a group do not have significant linear effects on heating costs.
• D) Reject H₀ and conclude that the 4 independent variables taken as a group do not have significant linear effects on heating costs.

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Definitions:

Social Norms

Implicit or explicit rules that a group of people follows, reflecting what is considered appropriate behavior within that group.

Deceitful Behavior

Actions that are intentionally dishonest or manipulative to gain an advantage or mislead others.

Monozygotic Twins

Twins that originate from a single fertilized egg, resulting in genetically identical offspring.

Concordance Rate

Probability that both twins will develop a disorder if one twin has the disorder.