House price y is estimated as a function of the square footage of a house x, a d
ID: 2946973 • Letter: H
Question
House price y is estimated as a function of the square footage of a house x, a dummy variable d that equals 1 if the house has ocean views and 0 otherwise; and a product of this dummy and the square footage xd The estimated house price, measured in $1,000s, is given by y = 91 + 0.17x + 39d + 0.01 xd a. Compute the predicted price of a house with ocean views and square footage of 2,400 and 3,400 respectively. (Round your final answers to the nearest whole number.) Square Footage 2,400 3,400 thousand thousand b. Compute the predicted price of a house without ocean views and square footage of 2,400 and 3,400 respectively. (Round your final answers to the nearest whole number.) Square Footage 2,400 3,400 thousand thousand c. Discuss the impact of ocean views on the house price O As square footage increases, the price difference between houses with and without ocean views becomes larger as well. O As square footage decreases, the price difference between houses with and without ocean views becomes smallerExplanation / Answer
a)
predicted value fr square footage 2400 is =91+0.17*2400+39*1+0.01*2400*1=562
predicted value fr square footage 3400 is =91+0.17*3400+39*1+0.01*3400*1=742
b)
predicted value fr square footage 2400 is =91+0.17*2400+39*0+0.01*2400*0=499
predicted value fr square footage 3400 is =91+0.17*3400+39*0+0.01*3400*0=669
c)
as square gootage increase price differcne between house with and without ocean views becomes larger as well
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.