What is the coefficient of determination, Basic Statistics

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The data in the table below are the results of a random sample of recent home sales in your neighborhood that your boss has asked you to use to estimate the relationship between the selling price of the house and the number of square feet in it.

Observation Number

Sale Price     (in thousands)

Square Feet (in hundreds)

1

280

20.3

2

328

30.0

3

281

21.5

4

293

25.4

5

263

14.5

6

291

22.3

7

320

31.0

8

256

37.2

9

311

27.1

10

352

30.2

11

288

21.2

12

356

37.2

13

293

23.0

14

272

26.7

15

308

26.5


a. First plot the data, with number of square feet on the "X" axis and the price of the house on the "Y" axis. Explain why housing price is the dependent variable and square feet is the independent variable.

b. What is the estimated regression line?  What does the coefficient of square feet represent?

c. Is the sample size large enough for the estimated coefficient of square feet to be statistically significant at the 5% level?

d. What is the coefficient of determination (R2)?

e. Perform an F-test, again at the 5% level.


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