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Question
NARRBEGIN: SA_100_102A new online auction site specializes in selling automotive parts for classic cars. The founder of the company believes that the price received for a particular item increases with its age (i.e., the age of the car on which the item can be used in years) and with the number of bidders. The Excel multiple regression output is shown below.
| Summary measures | |
| Multiple R | 0.8391 |
| R-Square | 0.7041 |
| Adj R-Square | 0.6783 |
| StErr of Estimate | 148.828 |
| ANOVA Table | |||||
| Source | df | SS | MS | F | p-value |
| Explained | 2 | 1212039 | 606019.7 | 27.3601 | 0 |
| Unexplained | 23 | 509444.9 | 22149.8 |
| Regression coefficients | ||||
| Coefficient | Std Err | t-value | p-value | |
| Constant | -1242.99 | 331.204 | -3.7529 | 0.001 |
| Age of Item | 75.017 | 10.65 | 7.0459 | 0 |
| Number of Bidders | 13.973 | 10.44 | 1.338 | 0.194 |
(A) Estimate a multiple regression model for the data.
(B) Which of the variables in this model have regression coefficients that are statistically different from 0 at the 5% significance level?
(C) Given your findings in (B), which variables, if any, would you choose to remove from the model estimated in (A)? Explain your decision.
Answer
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