SCENARIO 14-6 One of the Most Common Questions of Prospective House Buyers

Multiple Choice

SCENARIO 14-6
One of the most common questions of prospective house buyers pertains to the cost of heating in dollars (Y) . To provide its customers with information on that matter, a large real estate firm used the following 2 variables to predict heating costs: the daily minimum outside temperature in degrees of Fahrenheit ( X₁ ) and the amount of insulation in inches ( X ₂ ) . Given below is EXCEL output of the regression model.



Also SSR (X₁ | X₂) = 8343.3572 and SSR (X₂ | X₁) = 4199.2672
-Referring to Scenario 14-5,at the 0.01 level of significance,what conclusion should the microeconomist reach regarding the inclusion of Capital in the regression model?

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