HW exer-regr-2 var KEY

# HW exer-regr-2 var KEY - Applied Business Research Tools...

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Applied Business Research Tools Two-Variable Regression Exercise You are planning to buy a 1000 sq. foot house in one of two subdivisions. The regression results from these two subdivisions are presented below. PRICE is the sales price of a house and lot in dollars and SQFT is the house's size in sq. feet . The first numbers in parentheses are t-statistics; the second numbers are p-values. subdivision A: PRICE = 42,000 + 30.0 SQFT (3.72) (7.67) t-stats (0.02) (0.003) p-values F = 18.76 (0.001) R 2 = .723 n=274 subdivision B: PRICE = 25,000 + 35.0 SQFT (4.76) (5.32) (0.008) (0.005) F = 21.73 (0.0007) R 2 = .718 n=122 1. What is the proportion of variation in housing prices explained by house size in each model? How do you know? A: .723 or 72.3% B: .718 or 71.8%. Based on R-squared, gives proportion of variation in dependent variable explained by the regression. 2. For sub-division A, test the hypothesis (at 5%) that larger houses sell for higher prices. Write the null and alternative hypotheses, determine the appropriate test- statistic and critical value, and conclude. 0

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## This note was uploaded on 11/15/2010 for the course ECO 6416 taught by Professor Staff during the Spring '08 term at University of Central Florida.

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HW exer-regr-2 var KEY - Applied Business Research Tools...

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