SCENARIO 18-2
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 4 variables to predict heating costs: the daily minimum outside temperature in degrees of Fahrenheit ( X 1 ), the amount of insulation in inches ( X 2 ), the number of windows in the house ( X 3 ), and the age of the furnace in years ( X 4 ). Given below are the EXCEL outputs of two regression models.

-Referring to Scenario 18-1,which of the independent variables in the model are significant at the 5% level?
A)Income,Size,School
B)Income,Size
C)Size,School
D)Income,School

Question

SCENARIO 18-2
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 4 variables to predict heating costs: the daily minimum outside temperature in degrees of Fahrenheit ( X 1 ), the amount of insulation in inches ( X 2 ), the number of windows in the house ( X 3 ), and the age of the furnace in years ( X 4 ). Given below are the EXCEL outputs of two regression models.

-Referring to Scenario 18-1,which of the independent variables in the model are significant at the 5% level?
A)Income,Size,School 
B)Income,Size 
C)Size,School 
D)Income,School

Quizplus · Accepted Answer

In the first regression model, both Income and Size have p-values smaller than 0.05, indicating that they are significant at the 5% level. In the second model, only Size has a p-value smaller than 0.05, indicating its significance. Therefore, the best choice is the independent variables Income and Size.

SCENARIO 18-2 One of the Most Common Questions of Prospective House Buyers