SCENARIO 18-1 a Real Estate Builder Wishes to Determine How

question 252

Multiple Choice

SCENARIO 18-1 A real estate builder wishes to determine how house size (House) is influenced by family income (Income) , family size (Size) , and education of the head of household (School) .House size is measured in hundreds of square feet, income is measured in thousands of dollars, and education is in years.The builder randomly selected 50 families and ran the multiple regression.Microsoft Excel output is provided below: SUMMARY OUTPUT
-Referring to Scenario 18-1, when the builder used a simple linear regression model with house size (House) as the dependent variable and education (School) as the independent variable, he obtained an value of 23.0%.What additional percentage of the total variation in house size has been explained by including family size and income in the multiple regression?

• A)2.8%
• B)51.8%
• C)72.6%
• D)74.8%

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Definitions:

Optimal Consumption Bundle

A combination of goods and services that maximizes a consumer's satisfaction or utility, given their income and the prices of goods and services.

Normal Good

A type of good for which demand increases as consumers' income increases, and vice versa.

Inferior Good

A category of product whose demand falls when the income levels of buyers rise, in opposition to normal goods.

Consumer Choice

The range of preferences and decisions consumers face regarding the use of products, influenced by income, price, tastes, and preferences.