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House prices How does the price of a house depend on its size Data from Saratoga, New

Stats Modeling the World | 4th Edition | ISBN: 9780321854018 | Authors: David E. Bock, Paul F. Velleman, Richard D. De Veaux ISBN: 9780321854018 481

Solution for problem 14 Chapter 26

Stats Modeling the World | 4th Edition

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Stats Modeling the World | 4th Edition | ISBN: 9780321854018 | Authors: David E. Bock, Paul F. Velleman, Richard D. De Veaux

Stats Modeling the World | 4th Edition

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Problem 14

House prices How does the price of a house depend on its size? Data from Saratoga, New York, on 1064 randomly selected houses that had been sold include data on price ($1000s) and size (1000s ft2), producing the following graphs and computer output: Dependent variable is: Price R squared = 59.5% s = 53.79 with 1064 - 2 = 1062 degrees of freedom Variable Coefficient SE(Coeff) t-ratio P-value Intercept -3.11686 4.688 -0.665 0.5063 Size 94.4539 2.393 39.5 0.0001 a) Explain in context what the regression says. b) The intercept is negative. Discuss its value, taking note of its P-value. c) The output reports s = 53.79. Explain what that means in this context. d) Whats the value of the standard error of the slope of the regression line? e) Explain what that means in this context.

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QuadraticRelationship - Check the residual plot to determine of the form of model is appropriate QuadraticModel QuadraticModel(2) QuadraticModel NoteExample ConcaveUpward - As price increase the sales volume decrease at a decreasing rate b0= 539242.8 b1= -765344.8 b2= 290156.24 Interpretations b = 539242.8 0 We predicted the sales volume to be 539242.8 when the price of cat food is 0. - This is extrapolation b1= -765344.8 We have no potential interpretation - What if we increase x1 by 1 unit b 2 290156.24 Since b2 is positive, we have a positive concave upward relationship between price and volume of cat food. HypothesisTesting H 0β 20 vs H :a >2 t-test T = 20.23 p-value =

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Chapter 26, Problem 14 is Solved
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Textbook: Stats Modeling the World
Edition: 4
Author: David E. Bock, Paul F. Velleman, Richard D. De Veaux
ISBN: 9780321854018

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House prices How does the price of a house depend on its size Data from Saratoga, New