Question

4a

A real estate analyst believes that the three main factors that influence an apartment’s rent in a college town are the number of bedrooms, the number of bathrooms, and the apartment’s square footage. For 40 apartments, she collects data on the rent (y, in $), the number of bedrooms (x₁), the number of bathrooms (x₂), and its square footage (x₃). She estimates the following model as Rent = β₀ + β₁Bedroom + β₂Bath + β₃Sqft + ε. The following ANOVA table shows a portion of the regression results.

    

	df	SS	MS	F
Regression	3	5,694,781	1,898,260	50.88
Residual	36	1,343,192	37,311
Total	39	7,037,973
	Coefficients	Standard Error	t-stat	p-value
Intercept	292	83.0	3.52	0.0010
Bedroom	215	58.5	3.68	0.0004
Bath	106	54.2	1.96	0.1222
Sqft	0.2	0.06	3.33	0.027

The slope coefficient for Bedroom indicates that, holding other explanatory variables constant, ________.

Multiple Choice

• for each additional bedroom the rent is predicted to increase by $215

• for each additional bedroom the rent is predicted to increase by $0.20

• for each additional bedroom the rent is predicted to increase by $106

• for each additional bedroom the rent is predicted to increase by $292

Answer 1