Author Question: A collector of grandfather clocks believes that the price received for the clocks at an auction ... (Read 49 times)

wenmo · **on:** Feb 14, 2020

A collector of grandfather clocks believes that the price received for the clocks at an auction increases with the number of bidders, but at an increasing (rather than a constant) rate. Thus, the model proposed to best explain auction price (y, in dollars) by number of bidders (x) is the quadratic model

E(y) = β₀ + β₁x + β₂x²

This model was fit to data collected for a sample of 32 clocks sold at auction.

Suppose the p-value for the test of H₀: β₂ = 0 vs. H_a: β₂ > 0 is .02. What is the proper conclusion?
◦ There is evidence (at α = .05) of downward curvature in the relationship between auction price (y) and number of bidders (x).
◦ There is evidence (at α = .05) of upward curvature in the relationship between auction price (y) and number of bidders (x).
◦ Reject H₀ at α = .05; the model is not useful for predicting auction price (y).
◦ There is no evidence (at α = .05) of upward curvature in the relationship between auction price (y) and number of bidders (x).

babybsemail · **Reply #1 on:** Feb 14, 2020

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