ECON 203 1st Edition Lecture 20Outline of Last LectureI. Model Assessment1. R² (Coefficient of Determination)A. Understanding CoefficientB. The graphC. Standard Error of the Estimate2. Armani Pizza ExampleOutline of Current LectureI. Model Assessment1. The F-test for Overall validity of the ModelA. TailsB. Example: Car Sale Pricei. AnalysisCurrent LectureI. Model Assessment1. The F-test for Overall Validity of the Model- The second model to test variable dependence- Ho : B1=B2…=Bk = o - Not Valid- H1 : At least one B1 is not equal to zero Valid- It does not matter if B0 is equal to 1- The bigger F is the better, because we’ll be more likely to reject the null hypothesisA. TailsAlways an upper tailed testB. Example: Car Sale PriceSST/n-1 = Sample Variance of yThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.6434890/99 = sample variancei. AnalysisReject Ho ; we have proven that B ≠ 0 and it is less than alpha5.3177 = Finv(.05, 1, 8)(SSR/k)/(SSE/n-k-1) =
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