Question

Exercise 5.4
Refer back to exercise 2.2. Suppose that you fit the model to 20 data points and found that your F – value for testing the model is useful is 49.75.

Exercise 2.2
A hotel manager is concerned about hotel room rates for a large chain of hotels. The variables to be used in this research is defined as follows:
Y = the daily rate of a room
X1 = the population of the city
X2 = the rating of the hotel (1 star to 5 stars)
X3 = the number of rooms in the hotel
X4 = the number of hotels in the city

Answer the following:

A.) Now conduct the F-test for model utility.

B.) In exercise 5.4, what is the conclusion?

	a.	the model is not useful
	b.	the model is useful
	c.	the results are inconclusive

Answer 1

Exercise 5.4
Refer back to exercise 2.2. Suppose that you fit the model to 20 data points and found that your F – value for testing the model is useful is 49.75.

Exercise 2.2
A hotel manager is concerned about hotel room rates for a large chain of hotels. The variables to be used in this research is defined as follows:
Y = the daily rate of a room
X1 = the population of the city
X2 = the rating of the hotel (1 star to 5 stars)
X3 = the number of rooms in the hotel
X4 = the number of hotels in the city

Answer the following:

A.) Now conduct the F-test for model utility.

Df for total= 20-1=19

Df for regression =4

Df for error = 19-4=15

Critical F(4,15) at 0.05 level of significance=3.056

Calculated F 49.75 > critical F value 3.056

Ho is rejected.

The regression model is significant.

B.) In exercise 5.4, what is the conclusion?

	a.	the model is not useful
	Answer: b.	the model is useful
	c.	the results are inconclusive

Since regression model is significant, the 4 independent variables are useful in predicting daily rate of a room.