A Realtor Wants to Predict and Compare the Prices of Homes

question 96

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 alternative hypothesis for testing the individual significance of Age.

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Definitions:

General Adaptation Syndrome

A theoretical framework describing the body's short-term and long-term reactions to stress, consisting of three stages: alarm, resistance, and exhaustion.

Vulnerable

The state of being open to harm, damage, or illness, either physically or emotionally.

Illness

A condition of poor health perceived or felt by an individual, often characterized by the presence of disease or impairment.

General Adaptation Syndrome

A three-phase process (alarm, resistance, exhaustion) that describes the body's short-term and long-term reactions to stress.