Exhibit 17

question 104

Essay

Exhibit 17.8.A realtor wants to predict and compare the prices of homes in three neighboring locations.She considers the following linear models:
Model A: Price = β₀ + β₁Size + β₂Age + ε,
Model B: Price = β₀ + β₁Size + β₂Loc1 + β₃Loc2 + ε,
Model C: Price = β₀ + β₁Size + β₂Age + β₃Loc1 + β₄Loc2 + ε,
where,
Price = the price of a home (in $thousands),
Size = the square footage (in square feet),
Loc1 = a dummy variable taking on 1 for Location 1,and 0 otherwise,
Loc2 = a dummy variable taking on 1 for Location 2,and 0 otherwise.
After collecting data on 52 sales and applying regression,her findings were summarized in the following table. Note: The values of relevant test statistics are shown in parentheses below the estimated coefficients.
Refer to Exhibit 17.8.What is the p-value for testing the significance of Age in Model C?

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Definitions:

Connecting Points

The process or technique of determining a path or drawing a line between multiple points in a space.

Option

In finance, it refers to a contract which gives the buyer the right, but not the obligation, to buy or sell an underlying asset at a specified price on or before a specified date.

Observations

Data points or individual pieces of information collected during a study or research.

Simple Linear Regression

An analytical technique that utilizes a linear equation to depict the connection between a single independent variable and a dependent variable.