The accompanying table shows a portion of a data set that refers to the size of

Question

The accompanying table shows a portion of a data set that refers to the size of a home (in square feet) and its property taxes owed by the owner (in $) in an affluent suburb 30 miles outside New York City.

Determine the sample regression equation that enables us to predict property taxes on the basis of the size of the home. (Round your answers to 2 decimal places.)

Predict the property taxes for a 1500-square-foot home. (Round your answers to 2 decimal places.)

The accompanying table shows a portion of a data set that refers to the size of a home (in square feet) and its property taxes owed by the owner (in $) in an affluent suburb 30 miles outside New York City.

Explanation / Answer

The statistical software output for the given problem is:

Simple linear regression results:
Dependent Variable: Property Taxes
Independent Variable: Size (in square feet)
Property Taxes = 6499.4126 + 6.8062588 Size (in square feet)
Sample size: 20
R (correlation coefficient) = 0.75868184
R-sq = 0.57559813
Estimate of error standard deviation: 6641.9186

Parameter estimates:

Analysis of variance table for regression model:

Predicted values:

Hence,

a) Equation:

Property tax = 6499.41 + 6.81 Size

b) Slope coefficient interpretation:

As Size increases by 1 square foot, the property taxes are predicted to increase by $6.81.

Option 2 is correct.

c) For x = 1500,

Property taxes = 16708.80

Parameter Estimate Std. Err. Alternative DF T-Stat P-value Intercept 6499.4126 3918.9483 0 18 1.6584584 0.1145 Slope 6.8062588 1.3775303 0 18 4.940914 0.0001

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