A developer who specializes in summer cottage properties is considering purchasi

Question

A developer who specializes in summer cottage properties is considering purchasing a large track of land adjoining a lake. The current owner of the tract has already subdivided the land into separate building lots and has prepared the lots by removing some of the trees. The developer wants to forecast the value of each lot. From previous experience, she knows that the most important factors affecting the price of a lot are size, number of mature trees, and distance to the lake. From a nearby area, she gathers the relevant data for 60 recently sold lots. Based on the following regression output, answer the following questions.

A) Based on the information above, what is the regression equation?

a. Yhat = 23.52 + .559x1 + .229x2 - 195x3

b. Yhat = 51.39 + .700x1 + .679x2 - .378x3

c. Yhat = 51.39 + .4924x1 + .2425x2 - .2019x3

d. Yhat = 40.24 + .4924x1 + .2425x2 - .2019 x3

B) Based on the information above, what is the coefficient of determination?

a. 0.2019

b. 0.2425

c. % of the variation in prices is explained by the model.

d. Both a and c.

e. Both b and c.

C) Based on the information above, which statement is NOT true:

a. For each additional thousand square feet the price on average increases by .700 thousand dollars provided that the other variables remain constant.

b. For each additional tree the price on average increases by .679 thousand dollars provided that the other variables remain constant.

c. For each additional foot from the lake the price on average increases by .378 thousand dollars provided that the other variables remain constant.

d. For each additional foot from the lake the price on average decreases by .378 thousand dollars provided that the other variables remain constant.

D) Based on the information above, are any of the independent variables linearly related to the price of the lot in this model?

1 SUMMARY OUTPUT ression Statistics 4 Multiple R 5 R Square 6 Adjusted R Square 7 Standard Error 8 Observations 0.4924 0.2425 0.2019 40.24 60 10 ANOVA df MS Significance F 0.0013 5.97 12 Regression 13 Residual 14 Total 15 16 17 Intercept 18 Lot size 19 Trees 20 Distance 3 29,030 9676.6 90,69 1619.5 59 119,724 Coefficients Standard Errort Stat P-value 51.39 0.700 0.679 0.378 23.52 0.559 0.229 0.195 2.19 0.0331 1.25 0.2156 2.96 0.0045 1.940.0577

Explanation / Answer

a)

Coefficents of Lot size, tress , distance are 0.700, 0.679, -0.378 and intercept is 51.39

So option B is correct

b)

Coeeficent of determination is R Square = 0.2425.

So option b is correct.

option is definition of coeeficent of determination. So both b and c are correct.

c)

Option c is not True, because the sign of the coeeficent of distance is negative. For every increase in a foot distance from the lake, the price should decrease.

So Option is the answer.

D)

P - value of the Trees is 0.0045 < 0.05. So No of trees is a significant variable in the model. All other are not significant.

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.