Solution Found!
Recently sold, single-family homes. Refer to the
Chapter 12, Problem 108E(choose chapter or problem)
Recently sold, single-family homes. Refer to the National Association of Realtors data on sales price (y), region NAR (NE, NW, S, or W), and sales volume for 28 recently sold, single-family homes, Exercise 12.95 (p. 723). You fit a complete second-order model for E(y) as a function of region and sales volume.
a. Conduct a nested-model F-test to determine whether the quadratic terms in the model are statistically useful for predicting sales price (y). Use \(\alpha\) =.05
b. Based on the result, part a, which of the nested models (the complete or the reduced model) do you prefer to use in predicting sales price (y)? Explain.
c. Refer to part b. Treat the preferred model as the complete model and conduct a nested model F-test to determine whether region and sales volume interact to affect sales price (y). Use \(\alpha\) =.05
d. Based on the result, part c, which of the nested models (the complete or the reduced model) do you prefer to use in predicting sales price (y)? Explain.
Questions & Answers
QUESTION:
Recently sold, single-family homes. Refer to the National Association of Realtors data on sales price (y), region NAR (NE, NW, S, or W), and sales volume for 28 recently sold, single-family homes, Exercise 12.95 (p. 723). You fit a complete second-order model for E(y) as a function of region and sales volume.
a. Conduct a nested-model F-test to determine whether the quadratic terms in the model are statistically useful for predicting sales price (y). Use \(\alpha\) =.05
b. Based on the result, part a, which of the nested models (the complete or the reduced model) do you prefer to use in predicting sales price (y)? Explain.
c. Refer to part b. Treat the preferred model as the complete model and conduct a nested model F-test to determine whether region and sales volume interact to affect sales price (y). Use \(\alpha\) =.05
d. Based on the result, part c, which of the nested models (the complete or the reduced model) do you prefer to use in predicting sales price (y)? Explain.
ANSWER:Step 1 of 10
It is given that data on sales price, region (NE, NW, S, or W), and sales volume for 28
recently sold, single-family homes.
Complete model:
Second-order model for the sales price of a single-family home as function of region and
sales volume:
Where 
Reduced model:
The reduced model is obtained by dropping the quadratic terms out of the complete
model. So the reduced model in the problem is
