A real estate analyst believes that the three main factors that influence an apa

Question

A real estate analyst believes that the three main factors that influence an apartment's rent in a college town are the number of bedrooms, the number of bathrooms, and the apartment's square footage. For 40 apartments, she collects data on the rent (y, in $), the number of bedrooms (x1), the number of bathrooms (x2), and its square footage (x3). She estimates the following model: Rent = 0 + 1Bedroom + 2Bath + 3Sqft + . The following table shows a portion of the regression results.

When testing whether Bath is significant at the 5% significance level, she ________.

df SS MS F Significance F Regression 3 5,694,717 1,898,239 50.88 4.99E-13 Residual 36 1,343,176 37,310 Total 39 7,037,893 Coefficients Standard Error t-stat p-value Lower 95% Upper 95% Intercept 300 84.0 3.57 0.0010 130.03 470.79 Bedroom 226 60.3 3.75 0.0006 103.45 348.17 Bath 89 55.9 1.59 0.1195 24.24 202.77 Sq ft 0.2 0.09 2.22 0.0276 0.024 0.39

Explanation / Answer

Correct Answer: option (c) does not reject H0:2 = 0, and concludes that the number of bathrooms does not significantly influence rent.

Since P-value of Bath is 0.1195 > alpha 0.05, so we accept H0

or the confidence interval of Bath contains zero, so we accept H0

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