Question

Suppose the following data were collected relating the selling price of a house to square footage and whether or not the house is made out of wood. Use statistical software to find the regression equation. Is there enough evidence to support the claim that on average wood houses are more expensive than other types of houses at the 0.05 level of significance? If yes, type the regression equation in the spaces provided with answers rounded to two decimal places. Else, select "There is not enough evidence." Selling Prices of Houses Price Sqft Wood (1 if wood, 0 if otherwise) 185821 2004 1 246288 3691 1 224158 2975 1 247893 3339 0 205153 2649 0 168477 1566 0 231917 3324 1 177916 1768 1 201064 2336 1 161010 1386 0 225514 3026 1 222100 3384 0 217999 3119 1 174755 1939 0 210379 2861 0 196333 2400 0 177035 1513 1 171289 1831 0 159158 1763 0 229969 3361 1 Answer How to enter your answer Selecting a checkbox will replace the entered answer value(s) with the checkbox value. If the checkbox is not selected, the entered answer is used.

Answer 1

In order to solve this question I used Excel.

Step.1 Enter data in excel sheet.

Step.2 Go to 'Data' menu ---> 'Data Analysis' ---> Select 'Regression'.

Step.3 New window will pop-up on screen. Refer following screen shot and enter information accordingly.

Excel output:

SUMMARY OUTPUT
Regression Statistics
Multiple R	0.972191
R Square	0.945155341
Adjusted R Square	0.938703029
Standard Error	7037.183105
Observations	20
ANOVA
	df	SS	MS	F	Significance F
Regression	2	1.45E+10	7.25E+09	146.4832	1.92E-11
Residual	17	8.42E+08	49521946
Total	19	1.54E+10
	Coefficients	Standard Error	t Stat	P-value	Lower 95%	Upper 95%
Intercept	109017.9385	5660.189	19.26048	5.53E-13	97075.98	120959.9
sqft	35.74563607	2.251223	15.87832	1.25E-11	30.99597	40.4953
wood	5818.720135	3273.357	1.7776	0.093362	-1087.46	12724.9

P-value for slope coefficient of wood is 0.0933, which is greater than 0.05, Hence there is not enough evidence to conclude that on average wood houses are more expensive than other types of houses at the 0.05 level of significance.