Exercise 17-5 Algo (Round intermediate calculations to at least 4 decimal places

Question

Exercise 17-5 Algo

(Round intermediate calculations to at least 4 decimal places.)

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.

Compute the predicted price (in $1,000s) of a house with ocean views and square footage of 2,000. (Round your answer to 2 decimal places.)

Compute the predicted price (in $1,000s) of a house with ocean views and square footage of 3,000. (Round your answer to 2 decimal places.)

Compute the predicted price (in $1,000s) of a house without ocean views and square footage of 2,000. (Round your answer to 2 decimal places.)

Compute the predicted price (in $1,000s) of a house without ocean views and square footage of 3,000. (Round your answer to 2 decimal places.)

(Round intermediate calculations to at least 4 decimal places.)

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.

Explanation / Answer

Y= 120.33 + 0.15 x + 55.28 d

a1) Ocean view, d=1

square footage, x = 2000

Y = 120.33 + 0.15 (2000) + 55.28

= 475.61 ( in 000' $)

a2) Ocean view, d=1

square footage, x = 3000

Y = 120.33 + 0.15 (3000) + 55.28

= 625.51 ( in 000' $)

b1) without Ocean view, d=0

square footage, x = 2000

Y = 120.33 + 0.15 (2000) + 55.28(0)

= 420.33 ( in 000' $)

b2) without Ocean view, d=0

square footage, x = 3000

Y = 120.33 + 0.15 (3000) + 55.28(0)

= 470.33 ( in 000' $)

c

An ocean view increases the value of house price at the given level (55.28 thousand dollars).

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