Question

A real estate builder 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 feet, income is measured in thousands of dollars, and education is in years. The builder randomly selected 50 families and ran the multiple regression. Microsoft Excel output is provided below:

SUMMARY OUTPUT

Regression Statistics

Multiple R 0.865

R Square 0.748

Adjusted R Square 0.726

Standard Error 5.195

Observations 50

ANOVA

*df* SS MS *F* *Signif
F*

Regression 3605.7736 1201.9245 0.0000

Residual 1214.2264 26.3962

Total 49 4820.0000

Coeff StdError *t
Stat* *p-value*

Intercept -1.6335 5.8078 -0.281 0.7798

Income 0.4485 0.1137 3.9545 0.0003

Size 4.2615 0.8062 5.286 0.0001

School -0.6517 0.4319 -1.509 0.1383

Referring to Table 14-4, which of the independent variables in the model are significant at the 5% level?

Income, School |
||

Income, Size |
||

Size, School |
||

Income, Size, School |

Answer #1

Given Information:

A real estate builder wants to know 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 feet, income is measured in thousands of dollars, and education is in years.

The builder randomly selected 50 families and ran the multiple regression model in excel whose output is given.

To determine which independent variables in the model are significant at 5% level of significance by using p-value, we use the decision rule that if the p-value is less than 0.05 then the independent variable in the model is significant.

Independent variables |
p-value |

Income |
0.0003 |

Size |
0.0001 |

School |
0.1383 |

The independent variable having p-value less than 0.05 are Income and size.

Hence, the second option is the correct answer.

An executive in the home construction industry is interested in
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 feet, income
is measured in thousands of dollars, and education is in years. The
executive randomly selected 50 families and ran the multiple
regression. Excel output is provided below:
SUMMARY OUTPUT
Regression Statistics
Multiple R
0.865
R Square
0.748
Adjusted R...

A real estate builder wishes to determine how house size (House)
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education of the head of household (School). House size is measured
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