Question

Suppose that you in a multiple regression model of housing prices, you expect to find a...

Suppose that you in a multiple regression model of housing prices, you expect to find a positive relationship between the square footage of a house (independent variable) and the price of the house (dependent variable). Which of the following would be the most useful test ?

Group of answer choices

a one-tailed   F-test

a two-tailed   F-test

a two-tailed   t-test

a Chi-square test

a one-tailed   t-test

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Answer #1

Answer to the following question:

Option d: A One-tailed t-test.

Explanation: In this case, our model will look like:

HP= House Price, SF= Square footage.

We are to check if the β is less than or equal to zero or greater than zero.

The null hypothesis will be: H0: β≤0.

The alternative hypothesis will be: H1: β>0.

We will undertake the t test and test if the t statistic is significantly greater than the zero. And since we are expecting the SF to be positively related with the HP, the rejection region will be in the right tail of the normal curve.

Hope, I solved your query. Give good feedback.

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