A sample of 30 houses that were sold in the last year was taken. The value of th

Question

A sample of 30 houses that were sold in the last year was taken. The value of the house (Y) was estimated. The independent variables included in the analysis were the number of rooms(X_1), the size of the lot(X_2), the number of bathrooms(X_3), and a dummy variable(X_4) which equals 0 if the house doesnot have a garage and equals 1 otherwise. The following results were obtained: Estimate the value of a house that has 9 rooms, a lot with an area of 7.5, 2 bathrooms, and 2 garages. 86.1 79.8 88.8 93.3 97.8.

Explanation / Answer

Here regression model is

Y=15+2.2 X1+ 7.8 X2+ 2.7 X3+ 1.2 X4

Given that X1=9 , X2= 7.5 , X3= 2, X4 =1 (since house has garage) so we have

Y=15+2.2*9+ 7.8*7.5+ 2.7*2+ 1.2*1=99.9

So required estimated value is 99.9.

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