In: Statistics and Probability
A real estate analyst estimates the following regression, relating a house price to its square footage (Sqft):
PriceˆPrice^ = 48.36 + 52.50Sqft; SSE = 56,018; 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
PriceˆPrice^ = 28.71 + 40.44Sqft + 10.58Beds + 16.44Baths; SSE = 48,937; n = 50
[You may find it useful to reference the F table.]
a. Choose the appropriate hypotheses to determine whether Beds and Baths are jointly significant in explaining Price.
H0: β2 = β3 = 0; HA: At least one of the coefficients is greater than zero.
H0: β2 = β3 = 0; HA: At least one of the coefficients is nonzero.
H0: β1 = β2 = β3 = 0; HA: At least one of the coefficients is nonzero.
b-1. Calculate the value of the test statistic. (Round intermediate calculations to at least 4 decimal places and final answer to 3 decimal places.)
b-2. Find the p-value.
p-value < 0.01
c. At the 5% significance level, what is the conclusion to the test?