A real estate analyst estimates the following regression, relating a house price

Question

A real estate analyst estimates the following regression, relating a house price to its square footage (S?ft) Use Table 4 fice = 48 47 + 52 08sqft, SSE = 56,372 n 50 In an attempt to improve the results, he adds two more explanatory variables: the number of bedrooms (Beds) and the number of bathrooms (Baths). The estimated regression equation is Price 2881+40.86Sqft+ 10.15Beds+ 16.78Baths, SSE 48372, n 50 a. Choose the appropriate hypotheses to determine whether Beds and Baths are jointly significant in explaining Price Ho ß2-ß3-0; HA At least one of the coefficents is greater than zero O Hoß1 ?2-?3-0, HA Atleast one of the coefficents is nonzero. Ho ?2 : ?3-o HA At least one of the coefficients is nonzero b. Calculate the value of the test statistic. (Round intermediate calculations to at least 4 decimal places and final answer to 2 decimal places.) Test statistic c. At the 5%s nu cance level findthe crit cal value. (Use the appropriate Excel function to calculate the critical value. Round your answer to 2 decimal places.) Critical value d. What is the conclusion to the test? e Reject Hoi Beds and Baths are jointly significant in explaining Price 0 Reject H0; Sqt. Beds and Baths are jointly significant in explaning Price O Do not reject Hoi Saft Beds and Baths are not jointly significant in explaining Price O Do not reject Hoi Beds and Baths are not jointly signiticant in explaining Price Hints References eBook & Resources Hint#1 O Type here to search

Explanation / Answer

Result:

Ho: ?2=?3=0, Ha: Atleast one of the coefficients is nonzero.

ANOVA

Source of Variation

SS

df

MS

F

due to beds,baths

56372-48372=8000

2

4000.0000

3.8039

Within Groups

48372

46

1051.5652

Total

49

b). test statistic = 3.80

c).At 5% level, critical value F(2,46) = 3.20

d). Reject Ho. Beds and Baths are jointly significant in explaining price.

( calculated F=3.80 > critical value 3.20, Reject Ho)

ANOVA

Source of Variation

SS

df

MS

F

due to beds,baths

56372-48372=8000

2

4000.0000

3.8039

Within Groups

48372

46

1051.5652

Total

49

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