A real estate appraiser is interested in determining the factors that determine

Question

A real estate appraiser is interested in determining the factors that determine the price of a house. She wants to run thefollowing regression:Y=0+1X1+2X2+3X3whereY=price of the house in $1,000s,X1=number of bedrooms,X2=square footage ofliving space, andX3=number of miles from the beach. Taking a sample of 30 houses, the appraiser runs a multipleregression and get the following results:Y^=123.2+4.59X1+0.125X2-6.04X3,Sb0=103.2,Sb1=2.13,Sb2=0.062,Sb3=4.17, df=30-4, R2=0.47, andR2=0.45 (adjusted).

......what is the conclusion regarding the two tailed hypothesis test for 3 (reject or accept Ho and at what ?).....

Explanation / Answer

Y^=123.2+4.59X1+0.125X2-6.04X3

Ho: 3 = 0

H1: 3 0

t = -6.04/4.17

t = - 1.45

Assuming alpha = 0.05

t critical = - 2.056

p value = 0.16

p value > 0.05

Thus, null is rejected at alpha = 0.05

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