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,at the 0.01 level of significance,what conclusion should the builder reach regarding the inclusion of Income in the regression model?
A)Income is significant in explaining house size and should be included in the model because its p-value is less than 0.01.
B)Income is significant in explaining house size and should be included in the model because its p-value is more than 0.01.
C)Income is not significant in explaining house size and should not be included in the model because its p-value is less than 0.01.
D)Income is not significant in explaining house size and should not be included in the model because its p-value is more than 0.01.

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,at the 0.01 level of significance,what conclusion should the builder reach regarding the inclusion of Income in the regression model?
A)Income is significant in explaining house size and should be included in the model because its p-value is less than 0.01. 
B)Income is significant in explaining house size and should be included in the model because its p-value is more than 0.01. 
C)Income is not significant in explaining house size and should not be included in the model because its p-value is less than 0.01. 
D)Income is not significant in explaining house size and should not be included in the model because its p-value is more than 0.01.

Quizplus · Accepted Answer

The p-value for Income is 0.002 which is less than the significance level of 0.01. Therefore, Income is significant in explaining house size and should be included in the model.

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