# Question

A study was conducted to determine whether certain features could be used to explain variability in the prices of furnaces. For a sample of 19 furnaces, the following regression was estimated:

y = price, in dollars

x1 = rating of furnace, in BTU per hour

x2 = energy efficiency ratio

x3 = number of settings

The numbers in parentheses under the coefficients are the estimated coefficient standard errors.

a. Find a 95% confidence interval for the expected increase in price resulting from an additional setting when the values of the rating and the energy efficiency ratio remain fixed.

b. Test the null hypothesis that, all else being equal, the energy efficiency ratio of furnaces does not affect their price against the alternative that the higher the energy efficiency ratio, the higher the price.

y = price, in dollars

x1 = rating of furnace, in BTU per hour

x2 = energy efficiency ratio

x3 = number of settings

The numbers in parentheses under the coefficients are the estimated coefficient standard errors.

a. Find a 95% confidence interval for the expected increase in price resulting from an additional setting when the values of the rating and the energy efficiency ratio remain fixed.

b. Test the null hypothesis that, all else being equal, the energy efficiency ratio of furnaces does not affect their price against the alternative that the higher the energy efficiency ratio, the higher the price.

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