SCENARIO 14-6
One of the most common questions of prospective house buyers pertains to the cost of heating in dollars (Y). To provide its customers with information on that matter, a large real estate firm used the following 2 variables to predict heating costs: the daily minimum outside temperature in degrees of Fahrenheit ( X 1 ) and the amount of insulation in inches ( X 2 ). Given below is EXCEL output of the regression model.

Also SSR (X 1 | X 2 ) = 8343.3572 and SSR (X 2 | X 1 ) = 4199.2672
-Referring to Scenario 14-5,one company in the sample had sales of $21.439 billion (Sales = 21,439).This company spent $300 million on capital and $700 million on wages.What is the residual (in millions of dollars)for this data point?
A)790.69
B)648.31
C)-648.31
D)-790.69

Question

SCENARIO 14-6
One of the most common questions of prospective house buyers pertains to the cost of heating in dollars (Y). To provide its customers with information on that matter, a large real estate firm used the following 2 variables to predict heating costs: the daily minimum outside temperature in degrees of Fahrenheit ( X 1 ) and the amount of insulation in inches ( X 2 ). Given below is EXCEL output of the regression model.

Also SSR (X 1 | X 2 ) = 8343.3572 and SSR (X 2 | X 1 ) = 4199.2672
-Referring to Scenario 14-5,one company in the sample had sales of $21.439 billion (Sales = 21,439).This company spent $300 million on capital and $700 million on wages.What is the residual (in millions of dollars)for this data point?
A)790.69 
B)648.31 
C)-648.31 
D)-790.69

Quizplus · Accepted Answer

The residual is calculated as the difference between the actual value and the predicted value. Given the regression equation from Scenario 14-5 (which is not provided in the question, but assuming it involves predicting expenses based on sales), we calculate the residual for this company by subtracting its predicted expenses (based on sales) from its actual expenses (capital + wages = $300 million + $700 million = $1000 million). Without the specific regression equation, the exact calculation process can't be detailed, but the correct answer is based on the information provided in the question and the scenario.

SCENARIO 14-6 One of the Most Common Questions of Prospective House Buyers