# Regression Analysis

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In Hawaii, condemnation proceedings are underway to enable private citizens to own the property that their homes are built on. Until recently, homeowners leased the land from the estate. In order to comply with the new law, a large Hawaiian estate wants to use regression analysis to estimate the fair market value of the land. Each of the following 3 models were fit to data collected for n=20 properties, 10 of which are near a cove.

SUMMARY OUTPUT

Regression Statistics

Multiple R 0.985

R Square 0.970

Standard Error 9.5

Observations 20

ANOVA

df SS MS F Signif F

Regression 5 28324 5664 62.2 0.0001

Residual 14 1279 91

Total 19 29063

Coeff StdError tStat P-value

Intercept -32.1 35.7 -0.90 0.3834

Size 12.2 5.9 2.05 0.0594

Cove -104.3 53.5 -1.95 0.0715

Size*Cove 17.0 8.5 1.99 0.0661

SizeSq -0.3 0.2 -1.28 0.2204

SizeSq*Cove -0.3 0.3 -1.13 0.2749

Referring to the table, given a quadratic relationship between sale price (Y) and property size (X1), what null hypothesis would you test to determine whether the curves differ from cove and non-cove properties?

a. H0: B2=B3=B5=0

b. H0: B3=B5=0

c. H0: B4=B5=0

d. H0: B2=0

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##### Solution Summary

The solution describes the selection of appropriate null hypothesis for testing the significance of the linear and non-linear influence of a factor in a Regression analysis.

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The answer is (b) H0: B3=B5=0

Since it is given that a ...

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