A random sample of data were collected on residential sales in a large city. The
ID: 3396164 • Letter: A
Question
A random sample of data were collected on residential sales in a large city. The accompanying table shows the selling price (Y, in $1,000s), area(X1, in hundreds of square feet), number of bedrooms(X2), total number of rooms (X3), house age(X4, in years), and location (Z=0 for in-town and inner suburbs, Z=1 for outer suburbs).
In parts (a) through (c), use variables X1,X2,X3,X4 and Z as the predictor variables.
Use the accompanying computer output to answer parts a-d.
a. Use the all possible regressions procedure to suggest a best model.
b. Use the stepwise regression algorithm to suggest a best model.
c. Use the backward elimination algorithm to suggest a best model.
Explanation / Answer
The given question deals with the study of the regression analysis for the different types of regression under study.
d.
The stepwise regression or the backward elimination is a system generated model, or namely a system done regression analysis, which are times much better than normal usual regression done by us by including different variables, as the stepwise regression or the backward elimination can handle many variables at a time that is always give a whole or a braod view about the situation.
However, since the stepwise and backward elimination are system performed, there are a certain problem, such as the analyst himself may have some idea or knowledge about the data which may become helpful or useful while preparing the analysis, but when stepwise or backward elimination is done no such knowledge is taken into account, resulting into the analysis becoming useless from pratical point of view, since in this many variables may be taken which practically has no effect.
Similarly the stepwise regrssion may leave out the model with high coefficient of determination value, and may take a model with much low coefficient of determination value, thus providing a less usefull and imperfect model.
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