House price y is estimated as a function of the square footage of a house x and
ID: 3062698 • Letter: H
Question
House price y is estimated as a function of the square footage of a house x and a dummy variable d that equals 1 if the house has ocean views. The estimated house price, measured in $1,000s, is given by 116.02 + 0.12x + 53.1 5d. a-1. Compute the predicted price (in $1,000s) of a house with ocean views and square footage of 1,700 Round your answer to 2 decimal places.) Predicted price a-2. Compute the predicted price (in $1,000s) of a house with ocean views and square footage of 2,700 Round your answer to 2 decimal places.) Predicted price b-1. Compute the predicted price (in $1,000s) of a house without ocean views and square footage of 1,700. (Round your answer to 2 decimal places.) Predicted price b-2. Compute the predicted price (in $1,000s) of a house without ocean views and square footage of 2,700. (Round your answer to 2 decimal places.) Predicted price c. Discuss the impact of ocean views on the house price. An ocean view increases the value of house price at the given level (53.15 thousand dollars). An ocean view decreases the value of house price at the given level (53.15 thousand dollars).Explanation / Answer
a-1) The predicted price (in $1000s) of a house with ocean view and square footage of 1700 = 373.17
a-2) The predicted price (in $1000s) of a house with ocean view and square footage of 2700 = 493.17
b-1) The predicted price (in $1000s) of a house without ocean view and square footage of 1700 = 320.02
b-2) The predicted price (in $1000s) of a house without ocean view and square footage of 2700 = 440.02
c) Impact of ocean view on the house price : An ocean view increases the value of price by 53.15 thousand dollars.
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