Question

The accompanying data file shows the square footage and associated property taxes for 20 homes in an affluent suburb 30 miles outside of New York City. Estimate a home’s property taxes as a linear function of its square footage. At the 5% significance level, is square footage significant in explaining property taxes? Show the relevant steps of the test.

Please use Minitab and explain the various steps involved.

Property Taxes	Square Footage
21928	2449
17339	2479
18229	1890
15693	1000
43988	5665
33684	2573
15187	2200
16706	1964
18225	2092
16073	1380
15187	1330
36006	3016
31043	2876
42007	3334
14398	1566
38968	4000
25362	4011
22907	2400
16200	3565
29235	2864

Answer 1

Using Minitab, (Stat -> Regression -> Regression -> Fit Regression Model), we get the following output -

Testing whether square footage significant in explaining property taxes,

We get the T value = 4.94

and P-value = 0

Since P-value < 0.05, so we reject the null hypothesis at 5% level of significance and we conclude that square footage significant in explaining property taxes.