A real estate magazine reported the results of a regression analysis designed to

Question

A real estate magazine reported the results of a regression analysis designed to predict the price (y), measured in dollars, of residential properties recently sold in a northern Virginia subdivision. One independent variable used to predict sale price is GLA, gross living area (x), measured in square feet. Data for 157 properties were used to fit the model, E(y) = beta_0 + beta_1 x. The results of the simple linear regression are provided below. y = 96,600 + 22.5x s = 6500 R^2 = 0.77 t = 6.1 (for testing beta_1) Interpret the value of the coefficient of determination, R^2. A. The value of R^2 indicates that 77% of the total variation in the sample sale prices can be attributed to the linear relationship between GLA (x) and (y). B. The value of R^2 in indicates that there is a moderately strong positive correlation between sale price (y) and GLA (x). C. The value of R^2 indicates that 77% of the observed sale prices (y's) will fall within 2 standard deviations of the least squares line. D. The value of R^2 indicates that GLA (x) is linearly related to sale price (y) 77% of the time.

Explanation / Answer

R^2 express the amount of variation in response variable which could be attributed by variations in independent variable.

Hence the correct option is a

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