18) Use the following information to calculate the regression equation that pred

Question

18) Use the following information to calculate the regression equation that predicts a taxpayer's charitable contributions in 2014 from his/her charitable contributions in 2013 (both in thousands of dollars). Avr. charitable 2013 Avr. charitable 20142.3 SD1.08 SD= 0.72 r.75 b) y= .25x+ 1.5 d) y-25x + .5 e) y = .5x + 1.5 1A computer fits the equation to house value data y 120,000 + 52X1 + 32,000x2-40,000x3 y-value (in dollars), x1 size (in square feet), x2-1 if the house I s located in a nice section of town, and x3-1 if the house is located in a bad section of town. Suppose SSTotal 1486 and SSResidual 184. Find R2 a) 78.2% b) 82.5% c) 87.6% d) 90.0% e) 94.3%

Explanation / Answer

18)

slope b1=r*Sy/Sx =0.75*0.72/1.08=0.5

and intercept =Ybar-b1*Xbar=2.3-0.5*1.6=1.5

option E is correct

19)

R2 =1-SSresidual/SStotal =1-184/1486=0.876~ 87.6% option C

20)

residual=actual -predicted =380000-(120000+52*4000+32000*1-40000*0)=20000

option A

21)

SSregression=-14.4

option E

22)

option b : R2 increases

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