A Real Estate Developer Wishes to Determine How House Size

question 26

Multiple Choice

A real estate developer 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 metres,income is measured in thousands of dollars and education is in years.The developer randomly selected 50 families and developed a multiple regression model.The business literature involving human capital shows that education influences an individual's annual income.Combined,these may influence family size.With this in mind,what should the real estate developer be particularly concerned with when analysing the multiple regression model?

• A) Normality of residuals
• B) Collinearity
• C) Missing observations
• D) Randomness of error terms

---

Definitions:

Perfectly Competitive Industry

This refers to a market structure where numerous small firms compete against each other with no single company dominating the market, selling identical products, and having easy market entry and exit.

Perfectly Competitive Firm

A business that operates in a market where there are many buyers and sellers, the products are homogeneous, and there are no barriers to entry or exit.

Total Revenue

The total amount of money received by a company for goods sold or services provided during a specific period; calculated as the quantity sold multiplied by the sale price.

Output Produced

The total quantity of goods and services produced by a firm or economy over a specific period.