Using data on the appraised value of homes, a real estate agent computes the lea

Question

Using data on the appraised value of homes, a real estate agent computes the least-squares regression line for predicting a home’s value in 2002 from its value in 1992. The equation of the least-squares regression line is

y=$22,000 + 1.6x

A.) Identify the slope of this equation, and interpret it in terms of the problem.

B.) Identify the intercept and interpret it in terms of the problem

C.) Define R2 .   (Include its name, what values it ranges between, and what it describes in least squares regression.)

D.)

Using the following equation, predict the school GPA given an IQ of 110.

y=-8.5569 + 0.101x

Explanation / Answer

Answers to each part of the Qn are here:

A) Slope is 1.6 ( coefficient of X)

B) If the x is 0, or there is no value of home in 1992 , then the predicted value is going to be $22,000 in 2002

For 1 unit increase in dollar tems of the home value in 1992 the value in 2002 increases by $1.6

C) R-squared is a statistical measure of how close the data are to the fitted regression line. It is also known as the coefficient of determination, or the coefficient of multiple determination for multiple regression.

It lies between -1 and 1.

It also be termed as " the amount of variance in the dependent variable thaat can be explained by the variance in independent variable"

D) This is -8.5569 + .101*110= 2.5531

School GPA = 2.5531 for a person with IQ of 110

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