A real estate analyst believes that the three main factors that influence an apartment's rent in a college town are the number of bedrooms, the number of bathrooms, and the apartment's square footage. For 40 apartments, she collects data on the rent (y, in $), the number of bedrooms (x₁), the number of bathrooms (x₂), and its square footage (x₃). She estimates the following model: Rent = β₀ + β₁Bedroom + β₂Bath + β₃Sqft + ε. The following table shows a portion of the regression results. Which of the following are the hypotheses to test if the explanatory variables Bath and Sqft are jointly significant in explaining Rent? A) H₀: β₂ = β₃= 0; H_A: both of the coefficients are nonzero. B) H₀: β₂ = β₃= 0; H_A: at least one of the coefficients is zero. C) H₀: β₂ = β₃= 0; H_A: at least one of the coefficients is nonzero. D) H₀: β₂ = β₃= 0; H_A: both of the coefficients are zero.

Question

Quizplus · Accepted Answer

The hypotheses to test if the explanatory variables Bath and Sqft are jointly significant in explaining Rent are that both coefficients are zero (H₀: β₂ = β₃= 0) versus at least one of the coefficients is nonzero (H_A: at least one of the coefficients is nonzero). Therefore, the correct choice is C.

A Real Estate Analyst Believes That the Three Main Factors