In Hawaii, condemnation proceedings are under way to enable private citizens to
ID: 2907232 • Letter: I
Question
In Hawaii, condemnation proceedings are under way to enable private citizens to own the property that their homes are built on. Until recently, only estates were permitted to own land, and homeowners leased the land from the estate. In order to comply with the new law, a large Hawaiian estate wants to use regression analysis to estimate the fair market value of the land. The following model was fit to data collected for n = 20 properties, 10 of which are located near a cove.
where Y = Sale price of property in thousands of dollars
X1 = Size of property in thousands of square feet
X2 = 1 if property located near cove, 0 if not
Using the data collected for the 20 properties, the following partial output obtained from Microsoft Excel is shown:
SUMMARY OUTPUT
Regression Statistics
Multiple R 0.985
R Square 0.970
Standard Error 9.5
Observations 20
ANOVA
df SS MS F Signif F
Regression 5 28324 5664 62.2 0.0001
Residual 14 1279 91
Total 19 29063
Coeff StdError t Stat P-value
Intercept - 32.1 35.7 – 0.90 0.3834
Size 12.2 5.9 2.05 0.0594
Cove – 104.3 53.5 – 1.95 0.0715
Size*Cove 17.0 8.5 1.99 0.0661
SizeSq – 0.3 0.2 – 1.28 0.2204
SizeSq*Cove – 0.3 0.3 – 1.13 0.2749
Referring to Table 15-3, is the overall model statistically adequate at a 0.05 level of significance for predicting sale price (Y)?
Question 24 options:
No, since some of the t tests for the individual variables are not significant.
No, since the standard deviation of the model is fairly large.
Yes, since none of the beta-estimates are equal to 0.
Yes, since the p-value for the F-test is smaller than 0.05.
No, since some of the t tests for the individual variables are not significant.
No, since the standard deviation of the model is fairly large.
Yes, since none of the beta-estimates are equal to 0.
Yes, since the p-value for the F-test is smaller than 0.05.
Explanation / Answer
For checking the overall model, we need to check the p-value for F statistic. If the p-value for F (Signif F) is less than the 0.05 level of significance, we conclude that the model is significant.
As, the p-value for F (Signif F) is 0.0001 which is less than the 0.05 level of significance, the answer is,
Yes, since the p-value for the F-test is smaller than 0.05.
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