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A Real Estate Analyst Believes That the Three Main Factors

Question 87

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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. 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 (x<sub>1</sub>) , the number of bathrooms (x<sub>2</sub>) , and its square footage (x<sub>3</sub>) . She estimates the following model: Rent = β<sub>0</sub> + β<sub>1</sub>Bedroom + β<sub>2</sub>Bath + β<sub>3</sub>Sqft + ε. The following table shows a portion of the regression results.   When testing whether Bath is significant at the 5% significance level, she ________. A)  rejects H<sub>0</sub>: β<sub>2</sub> = 0, and concludes that the number of bathrooms significantly influences rent B)  does not reject H<sub>0</sub>: β<sub>2</sub> = 0, and concludes that the number of bathrooms significantly influences rent C)  rejects H<sub>0</sub>: β<sub>2</sub> = 0, and cannot conclude that the number of bathrooms significantly influence rent D)  does not reject H<sub>0</sub>: β<sub>2</sub> = 0, and cannot conclude that the number of bathrooms significantly influence rent. When testing whether Bath is significant at the 5% significance level, she ________.


A) rejects H0: β2 = 0, and concludes that the number of bathrooms significantly influences rent
B) does not reject H0: β2 = 0, and concludes that the number of bathrooms significantly influences rent
C) rejects H0: β2 = 0, and cannot conclude that the number of bathrooms significantly influence rent
D) does not reject H0: β2 = 0, and cannot conclude that the number of bathrooms significantly influence rent.

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