Aregression performed to predict selling price of houses found the equation Pric

Question

Aregression performed to predict selling price of houses found the equation Price 169.328 +35.3 Area 0,718 Lotsize 6543 Age where Price is in dollars, Area is in square feet, Lotsize is in square feet, and Age is in years. The R2 is 92%. For each of the following interpretations, determine whether the interpretation is correct or incorrect, and if necessary, explain why it is incorrect. a) Each year a house ages it is worth $6543 less. Choose the correct answer below. O A. This interpretation is incorrect because it attempts to use a response variable to predict a predictor. O B. This interpretation is incorrect because it does not take into account the value of R2 O C. This interpretation is incorrect because it does not take into account all predictors O D. This interpretation is correct. b) Every extra square foot of Area is associated with an additional $35.30 in average price, for houses with a given Lotsize and Age. Choose the correct answer below. O A. This interpretation is incorrect because it does not take into account al predictors. O B. This interpretation is incorrect because it does not take into account the value of R O C. This interpretation is incorrect because it attempts to use a response variable to predict a predictor. O D. This interpretation is correct.

Explanation / Answer

Soluton:

a) A. This interpretation is incorrect because it attempts to use a response variable to predict a predictor.
b) A. This interpretation is incorrect because it does not take into account all predictors.
c) B. This interpretation is incorrect because it attempts to use a response variable to predict a predictor.
d) D. This interpretation is incorrect because R^2 is the fraction of variability accounted for by the regression model, not the fraction of data points.

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