.A real estate analyst has developed a multiple regression line, y = 63 + 0.187
ID: 3046540 • Letter: #
Question
.A real estate analyst has developed a multiple regression line, y = 63 + 0.187 x1 – 3.7 x2, to predict y = the market price of a home (in $10,000s), using independent variables, x1 = the total number of square feet of living space, and x2 = the age of the house in years. What does the regression coefficient of x2 suggest?
Question 6 options:
A We can use the t-stat of coefficient of the x2 to calculate the F-stat of the overall model.
B If the square feet area of living space is kept constant, a 1 year increase in the age of the homes will result in a predicted increase of $37,000 in the price of the homes.
C If the square feet area of living space is kept constant, a 1 year increase in the age of the homes will result in a predicted drop of $3.7 in the price of the homes
D It means a negative relationship between the market price of a home and the age of the house in year.
E It means a positive relationship between the total number of square feet of living space and the age of the house in year.
Explanation / Answer
Interpretation of coefficient of x2:
It means a negative relationship between the market price of a home and the age of the house in year.
Option D is correct.
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