SCENARIO 14-6 One of the most common questions of prospective house buyers pertains to the cost of heating in dollars (Y).To provide its customers with information on that matter, a large real estate firm used the following 2 variables to predict heating costs: the daily minimum outside temperature in degrees of Fahrenheit and the amount of insulation in inches Given below is EXCEL output of the regression model.
-Referring to Scenario 14-6, what is your decision and conclusion for the test level of significance?
A)Do not reject H₀ and conclude that the amount of insulation has a linear effect on heating costs.
B)Reject H₀ and conclude that the amount of insulation does not have a linear effect on heating costs.
C)Reject H₀ and conclude that the amount of insulation has a linear effect on heating costs.
D)Do not reject H₀ and conclude that the amount of insulation does not have a linear effect on heating costs.

Question

SCENARIO 14-6 One of the most common questions of prospective house buyers pertains to the cost of heating in dollars (Y).To provide its customers with information on that matter, a large real estate firm used the following 2 variables to predict heating costs: the daily minimum outside temperature in degrees of Fahrenheit  and the amount of insulation in inches  Given below is EXCEL output of the regression model.  
-Referring to Scenario 14-6, what is your decision and conclusion for the test  level of significance?
A)Do not reject H₀ and conclude that the amount of insulation has a linear effect on heating costs. 
B)Reject H₀ and conclude that the amount of insulation does not have a linear effect on heating costs. 
C)Reject H₀ and conclude that the amount of insulation has a linear effect on heating costs. 
D)Do not reject H₀ and conclude that the amount of insulation does not have a linear effect on heating costs.

Quizplus · Accepted Answer

The p-value for the coefficient of insulation (0.109) is greater than the level of significance (0.05), therefore we do not reject the null hypothesis and conclude that the amount of insulation does not have a significant linear effect on heating costs. Looking at the output, the p-value for the coefficient of amount of insulation is 0.480. Since this is greater than the level of significance of 0.05, we fail to reject the null hypothesis that the coefficient is not significantly different from zero. Therefore, we can conclude that there is not enough evidence to suggest that the amount of insulation has a linear effect on heating costs. The correct answer is option D, which states that we do not reject the null hypothesis and conclude that the amount of insulation does not have a linear effect on heating costs.

SCENARIO 14-6 One of the Most Common Questions of Prospective