question archive House price y is estimated as a function of the square footage of a house x and a dummy variable d that equals 1 if the house has ocean views
House price y is estimated as a function of the square footage of a house x and a dummy variable d that equals 1 if the house has ocean views
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House price y is estimated as a function of the square footage of a house x and a dummy variable d that equals 1 if the house has ocean views. The estimated house price, measured in $1,000s, is given by y
y^ = 115.10 + 0.18x + 55.10d.
a-1. Compute the predicted price (in $1,000s) of a house with ocean views and square footage of 1,900. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
a-2. Compute the predicted price (in $1,000s) of a house with ocean views and square footage of 2,900. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
b-1. Compute the predicted price (in $1,000s) of a house without ocean views and square footage of 1,900. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
b-2. Compute the predicted price (in $1,000s) of a house without ocean views and square footage of 2,900. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
c. Discuss the impact of ocean views on the house price.
multiple choice
- An ocean view increases the value of house price by approximately 55.10 thousand dollars.
- An ocean view decreases the value of house price by approximately 18%.
- An ocean view decreases the value of house price by approximately 55.10 thousand dollars.
- An ocean view increases the value of house price by approximately 18%.
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a-1. Compute the predicted price (in $1,000s) of a house with ocean views and square footage of 1,900
Answer
y^ = 115.10 + 0.18x + 55.10d.
y^ = 115.10 + 0.18(1900) + 55.10(1)
y^ = 512.2
y^ = $ 512200
a-2. Compute the predicted price (in $1,000s) of a house with ocean views and square footage of 2,900
Answer
y^ = 115.10 + 0.18x + 55.10d.
y^ = 115.10 + 0.18(2900) + 55.10(1)
y^ = 692.2
y^ = $ 692200
b-1. Compute the predicted price (in $1,000s) of a house without ocean views and square footage of 1,900
Answer
y^ = 115.10 + 0.18x + 55.10d.
y^ = 115.10 + 0.18(1900) + 55.10(0)
y^ = 457.1
y^ = $ 457100
b-2. Compute the predicted price (in $1,000s) of a house without ocean views and square footage of 2,900.
Answer
y^ = 115.10 + 0.18x + 55.10d.
y^ = 115.10 + 0.18(2900) + 55.10(0)
y^ = 637.1
y^ = $ 637100
c. Discuss the impact of ocean views on the house price.
Answer - An ocean view increases the value of house price by approximately 55.10 thousand dollars.
