A multiple regression was conducted to predict the price of yachts in thousands of dollars.A dummy variable was included to indicate whether or not the yacht has a flying bridge,where 0 means "no" and 1 means "yes." Which of the following statements is correct using the 0.10 level of significance?
A)Having a flying bridge significantly increases the price of a yacht by an average of $17.7,given the other variables present.
B)Having a flying bridge significantly increases the price of a yacht by an average of $17,708,given the other variables present.
C)We can tell that 17 out of 20 yachts have a flying bridge.
D)Whether or not the yacht has a flying bridge does not significantly affect the price of a yacht,given the other variables present.

Question

A multiple regression was conducted to predict the price of yachts in thousands of dollars.A dummy variable was included to indicate whether or not the yacht has a flying bridge,where 0 means "no" and 1 means "yes."  Which of the following statements is correct using the 0.10 level of significance?
A)Having a flying bridge significantly increases the price of a yacht by an average of $17.7,given the other variables present. 
B)Having a flying bridge significantly increases the price of a yacht by an average of $17,708,given the other variables present. 
C)We can tell that 17 out of 20 yachts have a flying bridge. 
D)Whether or not the yacht has a flying bridge does not significantly affect the price of a yacht,given the other variables present.

Quizplus · Accepted Answer

The regression only indicates whether or not the variable has a significant effect on the price of the yacht, given the other variables present. The coefficient value of the dummy variable may provide information about the direction of the effect, but it should not be used to make claims about the actual price increase or decrease. Therefore, we cannot choose options A or B. Furthermore, the regression does not provide any information about the proportion of yachts with a flying bridge in the sample, so option C is also incorrect. The correct answer is D, which states that the presence of the flying bridge does not have a significant effect on the price of the yacht, given the other variables present.

A Multiple Regression Was Conducted to Predict the Price of Yachts