SCENARIO 17-1
a Real Estate Builder Wishes to Determine How

Multiple Choice

SCENARIO 17-1
A real estate builder wishes to determine how house size (House) is influenced by family income
(Income) , family size (Size) , and education of the head of household (School) . House size is
measured in hundreds of square feet, income is measured in thousands of dollars, and education is in
years. The builder randomly selected 50 families and ran the multiple regression. Microsoft Excel
output is provided below: SUMMARY OUTPUT
Regression Statistics
$\begin{array} { l l } \text { Multiple R } & 0.865 \\ \text { R Square } & 0.748 \\ \text { Adjusted R Square } & 0.726 \\ \text { Standard Error } & 5.195 \\ \text { Observations } & 50 \end{array}$
ANOVA
$\begin{array} { l c c c c c } & d f & \text { SS } & \text { MS } & F & \text { Signif } F \\ \text { Regression } & & 3605.7736 & 1201.9245 & & 0.0000 \\ \text { Residual } & & 1214.2264 & 26.3962 & & \\ \text { Total } & 49 & 4820.0000 & & & \end{array}$

$\begin{array} { l c l c c } & \text { Coeff } & \text { StdError } & t \text { Stat } & P \text {-value } \\ \text { Intercept } & - 1.6335 & 5.8078 & - 0.281 & 0.7798 \\ \text { Income } & 0.4485 & 0.1137 & 3.9545 & 0.0003 \\ \text { Size } & 4.2615 & 0.8062 & 5.286 & 0.0001 \\ \text { School } & - 0.6517 & 0.4319 & - 1.509 & 0.1383 \end{array}$
-Referring to Scenario 17-1, at the 0.01 level of significance, what conclusion should the builder reach regarding the inclusion of Income in the regression model?

A) Income is significant in explaining house size and should be included in the model because its p-value is less than 0.01.
B) Income is significant in explaining house size and should be included in the model because its p-value is more than 0.01.
C) Income is not significant in explaining house size and should not be included in the model because its p-value is less than 0.01.
D) Income is not significant in explaining house size and should not be included in the model because its p-value is more than 0.01.