Part of the output of a linear regression analysis to forecast house price (in $
ID: 3348507 • Letter: P
Question
Part of the output of a linear regression analysis to forecast house price (in $1000s) is shown below. Which of the following interpretation is NOT accurate in the context of the problem? Coefficients P-value Intercept Area (100 Sq Ft) Brick (1: Yes:O: NO) -40.89 004 7.56 001 8.52 002 Brick wall is statistically significant Area is statistically significant Having a brick wall will increase the house price by $8.520 on average. Every unit increase in Area will increase the house price by 7.56 unit on average.Explanation / Answer
In regression analysis , p-values indicate the level of significance of a predictor variable as long as it is lower than the alpha (intercept) value. Also, lower the value of p, greater is the significance.
Thus, brick wall and area are statistically significant; i.e., the first two statements are accurate.
The co-efficient represents the mean change in response per unit change in variable. Hence, every unit increase in area will affect the cost of the house by 7.56 units at an average.However, in the last statement, quantification of brick wall is improper.
Answer: The statement, “having a brick wall will increase the price of the house by $8.50 on average” is NOT correct