A real estate broker is interested in identifying the factors that determine the

Question

A real estate broker is interested in identifying the factors that determine the price of a house. She wants to run the following regression: Y = 1 + 2X2 + 3X3 + 4X4 + u where Y = price of the house in $1,000s, X2 = number of bedrooms, X3 = square footage of living space, and X4 = number of miles from the beach. Taking a sample of 30 houses, the broker runs a multiple regression and gets the following results: = 123.2 + 4.59x2 + 0.125x3 - 6.04x4, sb1 = 103.2, sb2 = 2.13, sb3 = 0.062, sb4 = 4.17, R2 = 0.47, and 2 = 0.45 (adjusted). What is the approximate p-value associated with the hypothesis test for the significance of 3?

Explanation / Answer

n = 30

k = 3

df= n-k-1 = 30 -3-1 = 26

TS = b3^/ se(b3^) = 0.125/0.062 = 2.016129

p-value = 2 P(T > 2.016129)

= =T.DIST.2T(2.016129,26)

= 0.054228

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