A Realtor Wants to Predict and Compare the Prices of Homes

question 38

Essay

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 + β₁ Size + β₃ Loc1 + β₄ Loc2 + ε
Model C: Price = β₀ + β₁Size + β₂Age + β₃ Loc1 + β₄ Loc2 +ε
where,
Price = the price of a home (in $1,000s)
Size = the square footage (in sq.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.
Using Model C,define the null hypothesis for testing the joint significance of the two dummy variables?

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Definitions:

Instincts

Innate, typically fixed patterns of behavior in animals in response to certain stimuli.

Emotions

Affective states that are experienced as a response to internal or external events and are associated with physiological, behavioral, and cognitive changes.

Primary Drives

Basic physiological needs such as hunger, thirst, and sleep, which motivate behavior to ensure survival.

Stimuli

External factors or events that elicit a physiological or psychological response in an organism.