D | Question 18 13.8 pts Data were collected from a random sample of 220 home sa

Question

D | Question 18 13.8 pts Data were collected from a random sample of 220 home sales from a community in 2013. Let Price denote the selling price (in $1000), BDR denote the number of bedrooms, Bath denote the number of bathrooms, Hsize denote the size of the house (in square feet). Lsize denote the lot size (in square feet). Age denote the age of the house (in years), and Poor denote a binary variable that is equal to 1 if the condition of the house is reported as "poor An estimated regression yiedls price 178 +0.47BDR 17.8Bath +325Ln (Hsize) +107Ln (Lsize) + 0.078Age 15Poor adjusted R2 0.678 (1): A 1% increase in the size of the house results in on average housing price (in dollars). (2): Suppose that a homeowner converts part of an existing family room in her house into a new bathroom. What is the expected increase in the value of the house increase in (in dollars)? (round your answer to t (3): Based on the regression results, calculate R-square decimal points).

Explanation / Answer

(1) answer is 3.25

Y=B0 + B1*ln(X) + u ~ A 1% change in X is associated with a change in Y of 0.01*B1

here change in 1% in Hsize associated in change in price=0.01*325=3.25 unit

so 3.25 thousand change in price ( if other independent variable will remains the same)

(2)answer is 17.33

since there is conversion of one family rook into bathroom,

required change in price will be=(-1)*0.47+(1)*17.8=17.33

answer is 17.33 thousands

(3) R-square=0.678

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