A regression model built to estimate the fair market value of a certain class of

Question

A regression model built to estimate the fair market value of a certain class of homes contained two X variables - Property Size in acres and House Size in square feet. Part of the output is shown below:

Coefficients Standard Error t Stat P-value

Intercept 148.94 14.15 10.53 0.00

Property size (acres) 278.49 98.09 2.84 0.01

House Size (square feet) 0.08 0.01 5.78 0.00

What is the estimated fair market value for a home with 1,600 square feet that is situated on a 0.30 acre lot? (Round your answer to 1 decimal place)

Explanation / Answer

Here regression model is

y' = 148.94 + 278.49 *Property-size+0.08 * House size

So required predicted value for Property-size =0.30 and House-size =   1600 is

y' = 148.94 + 278.49 *0.30+0.08 *1600 = 360.487

Hence, estimated fair value is 360.5.

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