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Activity #4

The document discusses the significance of various models in predicting house selling prices based on different variables. Model 1 is significant, while Model 3 is better than Model 2 due to the inclusion of a significant predictor, age. Model 4 is not better than Model 3, and for specific predictors like the number of bedrooms and bathrooms, new models and tests are suggested.

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Ellie Stolyar
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4 views2 pages

Activity #4

The document discusses the significance of various models in predicting house selling prices based on different variables. Model 1 is significant, while Model 3 is better than Model 2 due to the inclusion of a significant predictor, age. Model 4 is not better than Model 3, and for specific predictors like the number of bedrooms and bathrooms, new models and tests are suggested.

Uploaded by

Ellie Stolyar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as TXT, PDF, TXT or read online on Scribd
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Danielle, Jose, Andy

12 November 2023

Use outputs from Page #4 to answer all these questions.


1. Is Model 1 a significant model? Explain: Model 1 is a significant model because
its p-value is less than 0.0001 which means you would reject H0 and the model would
be significant.
What test do you have to perform to answer this question?
Model Utility Test (F-test)
Perform an appropriate test (if needed state the null and alternative hypotheses
and report conclusion).
H0: β1 = β2 = 0
Ha: at least βi ≠ 0
T-stat: 110.817
p-value: <.0001
p < a → reject H0
At 0.05 significance level, we have enough evidence to conclude that there is at
least one variable that is a significant predictor of selling price.
2. Is Model 2 better than Model 3? Explain: Model 2 can not be better than Model 3
because it is the reduced model so it is either the same or worse than Model 2
which is the complete model. In this case, Model 2 is not better than Model 3 as
model 3 has one extra variable which is the age of the house and it is a
significant predictor therefore Model 3 is better than Model 2.
What test do you have to perform to answer this question?
F-partial test or individual t - test
Perform an appropriate test (if needed state the null and alternative hypotheses
and report conclusion).
H0: B4 =0
Ha: B4 ≠ 0
T-stat: 2.67
p-value: 0.0090
p < a → reject H0
At a 0.05 significance level, we have enough evidence to conclude that the age in
years is a significant predictor of the selling price of the house after accounting
for all other variables
3. Is Model 4 better than Model 3? Explain: Model 4 is not better than Model 3 as
the extra variable in Model 4 is not a significant predictor in determining the
selling price of the house.
What test do you have to perform to answer this question?
F-partial test or individual t - test
Perform an appropriate test (if needed state the null and alternative hypotheses
and report conclusion).
H0: B5 =0
Ha: B5 ≠ 0
T-stat: -1.24
p-value: 0.220
p > a → fail to reject H0
At a 0.05 significance level, we do not have enough evidence to conclude that the
distance to downtown is a significant predictor for the selling price of the house
after accounting for all other variables
4. Which Model and what test should be used to answer the following question: Is
the #bedrooms of the house a significant predictor of the selling price of the
house after accounting for size and age of the house? If none of the Models
(Model:1/2/3/4) is used, explain what model will you create and what test will you
perform .
None of the models should used and you should perform an individual t-test to
single out the number of bedrooms. I would create another model which accounts for
size, age, and bedrooms.
5. Which Model and what test should be used to answer the following question: Is #
bath of the house a significant predictor of the selling price of the house after
accounting for size and #bed? If none of the Models (Model:1/2/3/4) is used,
explain what model will you create and what test will you perform.
Model 2 should used and I will perform an individual t-test.
6. Which Model and what test should be used to answer the following question: Is
distance to downtown a significant predictor of the selling price of the house
after accounting for size, # ba ,#bed and age? If none of the Models
(Model:1/2/3/4) is used, explain what model will you create and what test will you
perform.
Model 4 should be used and I will perform an individual t-test.

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