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(b) A commercial real state company evaluates vacancy rates, square footage, and operat- ing expenses for commercial properties in a large metropolitan area in order
(b) A commercial real state company evaluates vacancy rates, square footage, and operat- ing expenses for commercial properties in a large metropolitan area in order to provide clients with quantitative information upon which to make rental decisions. The data are taken from 71 suburban commercial properties that are the newest, best located, most attractive, and expensive for five specific geographic areas. The variables ob- served were: X1=age, X2=operating expenses and taxes, X3=vacancy rates, X4=total square footage, and Y=rental rates. The following output on sequential sum of squares and residual sum of squares was extracted: Analysis of Variance Table Response: Y Df Sum S X4 1 44.878 X1 1 24.311 X2 1 18.175 X3 3.591 Residuals 66 76.306 1 (a) Test whether both X2 and X3 can be dropped from the regression model given that X1 and X4 are retained; use a = 0.01. State the alternatives, decision rule and conclusion. (b) Calculate Ra and Ry3|124 (b) A commercial real state company evaluates vacancy rates, square footage, and operat- ing expenses for commercial properties in a large metropolitan area in order to provide clients with quantitative information upon which to make rental decisions. The data are taken from 71 suburban commercial properties that are the newest, best located, most attractive, and expensive for five specific geographic areas. The variables ob- served were: X1=age, X2=operating expenses and taxes, X3=vacancy rates, X4=total square footage, and Y=rental rates. The following output on sequential sum of squares and residual sum of squares was extracted: Analysis of Variance Table Response: Y Df Sum S X4 1 44.878 X1 1 24.311 X2 1 18.175 X3 3.591 Residuals 66 76.306 1 (a) Test whether both X2 and X3 can be dropped from the regression model given that X1 and X4 are retained; use a = 0.01. State the alternatives, decision rule and conclusion. (b) Calculate Ra and Ry3|124
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