Test the following hypotheses: Null Hypothesis: the coefficient for the appraise

Question

Test the following hypotheses: Null Hypothesis: the coefficient for the appraised land value = 0 versus Alternative Hypothesis: the coefficient for the appraised land value is not = 0. State the conclusion of the test and the reason for the conclusion. Write a short sentence explaining the practical implication of the result of this test.

Choose the best answer from the following:

i) The p-value for testing the hypothesis that the coefficient for the land value equals 0 is .131. This p-value is greater than .05 so this hypothesis cannot be rejected. This means the appraised land value does not help explain the sale price The regression equation is Sale Price 1470 + 0.814 Land value + 0.820 Home value + 13.5 Area Predictor Constant Land Value 0.8145 0.5122 1.59 0.131 Home Value 0.8204 0.2112 3.88 0.001 Area Coef SE Coef 1470 5746 0.26 0.801 13.529 6.586 2.05 0.057 S 7919.48 R-sa 89.7% R-Sg(adj ) -87.8% - - Analysis of Variance DE Source Regression Residual Error 16 1003491259 Total MS 3 8779676741 2926558914 46.66 0.000 62718204 19 9783168000

Explanation / Answer

For testing the significance of coefficient of land value, i.e

H0 : the coefficient for the appraised land value = 0 vs H1: the coefficient for the appraised land value is not = 0

We reject H0 at 5% level of signficance if P-value < 0.05

Here

We have P-value = 0.131 > 0.05, so we fail to reject H0 at 5% level of signficance.

ans-> i) The p-value for testing the hypothesis that the coefficient for the land value equals 0 is .131. This p-value is greater than .05 so this hypothesis cannot be rejected. This means the appraised land value does not help explain the sale price

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