An real estate analyst believes that the three main factors that influence an ap
ID: 3368890 • Letter: A
Question
An 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 as Rent = ?0 + ?1Bedroom + ?2Bath + ?3Sqft+ ?. The following ANOVA table shows a portion of the regression results.
The coefficient of determination indicates that __________.
19.08% of the variation in Rent is explained by the variation in the explanatory variables
19.08% of the variation in the explanatory variables is explained by the variation in Rent
80.92% of the variation in Rent is explained by the variation in the explanatory variables
80.92% of the variation in the explanatory variables is explained by the variation in Rent
df SS MS F Regression 3 5,694,717 1,898,239 50.88 Residual 36 1,343,176 37,310 Total 39 7,037,893 Coefficients Standard Error t-stat p-value Intercept 300 84.0 3.57 0.001 Bedroom 226 60.3 3.75 0.0006 Bath 89 55.9 1.59 0.1195 Sq ft 0.2 0.09 2.22 0.0276Explanation / Answer
Rsq=Coeffciient of determiantion
=SSE/SST
=1,343,176/7,037,893
=
0.190849
=0.1908*100
=19.08%
19.08% VARIATION IN Rent IS EXPLAINED BY THE independen variables
OPTION A
19.08% of the variation in Rent is explained by the variation in the explanatory variables
0.190849
=0.1908*100
=19.08%
19.08% VARIATION IN Rent IS EXPLAINED BY THE independen variables
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