You fit a complete second-order model for E(y) as a function of region and sales volume.
a. Conduct a nested-model F-test to determine whether the quadratic terms in the model are statistically useful for predicting sales price (y). Use α = .05.
b. Based on the result, part a, which of the nested models (the complete or the reduced model) do you prefer to use in predicting sales price (y)? Explain.
c. Refer to part b. Treat the preferred model as the complete model and conduct a nested model F-test to determine whether region and sales volume interact to affect sales price (y). Use a = .05.
d. Based on the result, part c, which of the nested models (the complete or the reduced model) do you prefer to use in predicting sales price (y)? Explain.
For information: Refer to the National Association of Realtors data on sales price (y), region (NE, NW, S, or W), and sales volume for 28 recently sold, single-family homes, Exercise 12.95.