SCENARIO 14-4
A real estate builder wishes to determine how house size (House) is influenced by family income (Income) and family size (Size). House size is measured in hundreds of square feet and income is measured in thousands of dollars. The builder randomly selected 50 families and ran the multiple regression. Partial Microsoft Excel output is provided below:

Also SSR (X 1 | X 2 ) = 36400.6326 and SSR (X 1 | X 2 ) = 3297.7917
-Referring to Scenario 14-4,suppose the builder wants to test whether the coefficient on Income is significantly different from 0.What is the value of the relevant t-statistic?
A)-0.7630
B)3.2708
C)10.8668
D)60.0864

Question

SCENARIO 14-4
A real estate builder wishes to determine how house size (House) is influenced by family income (Income) and family size (Size). House size is measured in hundreds of square feet and income is measured in thousands of dollars. The builder randomly selected 50 families and ran the multiple regression. Partial Microsoft Excel output is provided below:

Also SSR (X 1 | X 2 ) = 36400.6326 and SSR (X 1 | X 2 ) = 3297.7917
-Referring to Scenario 14-4,suppose the builder wants to test whether the coefficient on Income is significantly different from 0.What is the value of the relevant t-statistic?
A)-0.7630 
B)3.2708 
C)10.8668 
D)60.0864

Quizplus · Accepted Answer

To test whether the coefficient on income is significantly different from 0, we need to calculate the t-statistic for the income variable. From the Excel output, we see that the coefficient for income (XS1-U1B11) is 1.7551 and its standard error (XS1-U1B13) is 0.5377. Therefore, the t-statistic for income is (1.7551-0)/0.5377 = 3.2708. To determine whether this t-statistic is significant, we need to compare it to the critical t-value at a certain level of significance and degrees of freedom. Since we are not given the significance level or degrees of freedom, we cannot make a definitive conclusion about the significance of the coefficient on income. However, we can say that the value of the t-statistic itself is 3.2708.

SCENARIO 14-4 A Real Estate Builder Wishes to Determine How House Size