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

question 249

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, what is your decision and conclusion for the test H₀: β₂ = 0 vs H₁: β₂ < 0 at the α = 0.01 level of significance using Model 1?

• A) Do not reject H₀ and conclude that the amount of insulation has a linear effect on heating cots.
• 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 negative linear effect on heating costs.
• D) Do not reject H₀ and conclude that the amount of insulation has a negative linear effect on heating costs.

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Definitions:

Homogenization

A process by which differences among elements are minimized, making them uniform or similar, often used in contexts such as culture, milk processing, and societal integration.

Regionalization

The division of an area into smaller regions or the tendency of countries to form regional alliances for economic, social, or political purposes.

Modernization Theory

A theory suggesting that as societies develop, they will follow a similar path of development to those of more developed countries, emphasizing the role of technology and economic growth.

Dependency Theory

A theory suggesting that economic conditions in developing countries are largely influenced by their dependence on and relationships with developed countries.