Question
8
4 / 4
points
A real estate builder wishes to determine how house size (House) is influenced by family income
(Income), family size (Size), and education of the head of household (School). House size is measured
in hundreds of square feet, income is measured in thousands of dollars, and education is in years. The
builder randomly selected 50 families and ran the multiple regression. The business literature
involving human capital shows that education influences an individual’s annual income. Combined,
these may influence family size. With this in mind, what should the real estate builder be particularly
concerned with when analyzing the multiple regression model?
Non-randomness of error terms
Multicollinearity
Missing observations
All of the above

Question
9
4 / 4
points
TABLE 15-3
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 10
4 / 4
points

The overall upward or downward pattern of the data in a monthly time series will be contained in the
____________ component.