A real estate company wants to study the relationship between house sales prices

Question

A real estate company wants to study the relationship between house sales prices and some important predictors of sales prices. Based on data from recently sold homes in the area,

x1= total floor area (in square feet)

x2=number of bedrooms

x3=distance to nearest high school in miles

are used in a multiple regression model. the estimated model is:

the variables sales price (in thousands of dollars) total floor area (in square feet) number of bedrooms distance to nearest high school (in miles) are used in a multiple regression model. The estimated model is . Answer the folowing questions for the interpretation of the coefficient of in this model

Holding the other varibalbe fixed, what is the average change in sales price for each 100 square foot increase in floor space?

Is this change an increase or decrease?

Explanation / Answer

he average change in sales price is =0.052*100=5.2 (thousands of dollars)

regression of coefficient X1is total floor area

Is this change an increase or decrease?

increase because regression of coefficient X1 is possitive

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