A realtor in jutington, Massachusetts, is analyzing the relationship between the

ID: 3402459 • Letter: A

Question

A realtor in jutington, Massachusetts, is analyzing the relationship between the sale price of a home (price) its square footage (sqft), the number of bedrooms (Beds) and the number of bathrooms (Baths) she collects data on 36 recent states in Julingtion in the first quarter of 2009 of the analysis. The data set can be found on the text website, labeled Arfington Homes She estimates the model as price = beta_0 + beta_1 sqft + beta_2 beds + beta_3 baths + epsilon and obtains the following output. Interpret the coefficient of sqft. For every additional square foot the predicted price of a home increased by $123.11 holding square foot, number of bedrooms and bathrooms constant For every additional square foot, the predicted price of a home increased by $123.11 Predict the price of a 2,191 square-foot home with four bedrooms and three bathrooms.

Explanation / Answer

It is 3rd option

The coefficient of sqft is 123.11

Hence for every increase in sqft the price increases by 123.11

Sqft = 2191

Number of bedrooms =4

Bathrooms = 3

Price = 63,819.16+123.11*2191+28,115*4+69668*3

=$655017.17