Regression equation and coefficient of determination.

1. Which of these following statements provides the best guidance for the model building?

a. If the value of r2 increases as more variables are added to the model, the variables should remain in the model, regardless of the magnitude of increase.

b. If the value of the adjusted r2 increases as more variables are added to the model, variables should remain in the model.

c. If the value of r2 increases as more variables are added to the model, variables should not remain in the model, regardless of the magnitude of increase.

d. If the value of the adjusted r2 increases as more variables are added to the model, variables should not remain in the model.

e. None of the statements provide accurate guidance.

2. A air conditioning and heating repair firm conducted a study to determine if the outside temperature could be used to predict the cost of an electric bill for homes during the winter months in Housion. Texas. The resulting regression equation was:

Y = 227.19 - 1.45X,  Where Y = monthly cost, X = outside air temperature

a. If the temperature averaged 48 degrees throughout December, what is the forecasted of December's electric bill?

b. If the temperature averaged 38 degrees throughout January, what is the forecasted cost of January electric bill?