2. The regression model below examines factors that impact the DV home sale pric
ID: 3237309 • Letter: 2
Question
2. The regression model below examines factors that impact the DV home sale price among recently sold homes in a suburban community. The IV is total rooms within the home, and the EVs include 1) total bedrooms, 2) total bathrooms, 3) whether the home has a basement or not, and 4) the total number of days the home was on the market prior to its sale. Please answer the following regarding the regression output below: A) Identify the variables that are statistically significant predictors (at the .05 percent level) of a home’s sale price. [10] B) Of the variables you identified in Part A, what statistics did you examine to determine each variable’s statistical significance? Explain the thresholds used to determine statistical significance. [5] C) Explain what the coefficient for the EV “Total Bathrooms” means. [5] D) Explain what the coefficient for the EV “Days on Market” means. [5] E) What does the model’s R-square of .33 mean? [5]
DATA:
source ss df ms model 7.9698e+10 5 1.5940e+10 Residual 1.5839e+11 90 1.7599e+09 total 2.3809e+11 95 2.5062e+09Explanation / Answer
A) The following explanatory variables are significant (p<0.05) independent predictors of home's sale price
1) Total rooms (p=0.047<0.05)
2) Bathrooms (p=0.000<0.05)
B) Student-t statistic is used for examine to determine each variable’s statistical significance.Level of significance 0.05 is used to determine statistical significance.
C) The regression coefficient of total bath rooms (43553.03) means, one unit change in total bath rooms, the home's sale price is increased by 43553.03 units.
D) Actually days on market is not a significant predictor (p>0.05). The regression coefficient of days on market (-72.53292) means, one unit change in days on market the home's sale price is decreased by -72.53292 units.
E) R2 = 0.33=33%( WHICH IS CALLED COEFFICIENT OF DETERMINATION), it means that 33% of variation in the home's sale price is explained by the significant independent variables only.
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