This Question: 1 pt 4 36 of 37 (4 complete) This Quiz: 37 pts possiblc Areguessi

Question

This Question: 1 pt 4 36 of 37 (4 complete) This Quiz: 37 pts possiblc Areguession analysis of 117 homes for sale produced the lollowing model, where price is in thousands dollars and size is in square leet a Explain what the slope ol the line says about housing prices and house size. b) What price would you predict for a 3000-square-foot house in this market? agent shows a touyer a 1200 House, saying that asking price is sesoo less than wat onewold pect to pay ora housed size what is askng por and wat see a) Explain what the slope of the line says about housing prices and house size O A. For every S1000 increase in price of a house, the size is predicted to increase by 0062 square feet. O B. For every $1 increase in price of a house, the size is predicted to increase by 62 square teet. O C. For every additional square foot of area ot a house, the price is predicted to increase by 062 O D. For every additional square foot area ot a house. the price is predcted to increase by se2 b) What price would you predict lor a 3000 square loot house in this market? c) Areal estate agent shows a potential buyer a 1 square tot house saying that the asking price is s6500 less than what one would expect to pay a house of this size what is the asking poe? what is the $6500 called? cick to select your answer(s) 11:03 B

Explanation / Answer

1) a) For additional square foot of area of a house, the price is predicted to increase by $0.062

b) price = 47.88 + 0.062*3000 = $233.880 (in thousands of dollars) = $233880

c) predicted price = 47.88 + 0.062*1200 = $122.280 (in thousands of dollars) = $122280
asking price = 122280 - 6500 = $115780

$6500 is called the residual

2) a) B. This would suffer from nonresponse bias

b) A. This would suffer from undercoverage

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