Question: A multiple regression model has k = 3 explanatory variables. The coefficient of determination, R2, is found to be 0.653 based on a sample of

A multiple regression model has k = 3 explanatory variables. The coefficient of determination, R2, is found to be 0.653 based on a sample of n = 25 observations.

(a) Compute the adjusted R2.

(b) Compute the F-test statistic.

(c) If one additional explanatory variable is added to the model and R2 increases to 0.665, compute the adjusted R2. Would you recommend adding the additional explanatory variable to the model? Why or why not?

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