Question 5 (1 point) Suppose that in a certain neighborhood, the cost of a home

Question

Question 5 (1 point)

Suppose that in a certain neighborhood, the cost of a home (in thousands) is proportional to the size of the home in square feet. The regression equation quantifying this relationship is found to be (price) = 0.013*(size) + 49.839. You look more closely at one of the houses selected. The house is listed as having 2726.936 square feet and is listed at a price of $110.557 (thousand). What is the residual?

Question 5 options:

1)

2)

3)

4)

5)

1)

-25.268

2)

2641.647

3)

-2616.379

4)

2616.379

5)

25.268

Explanation / Answer

(price) = 0.013*(size) + 49.839

for size = 2726.936

price = 0.013*(2726.936) + 49.839

price = 85.29

Residual = Observed value - Predicted value

residual = 110.557 - 85.29 = 25.268

Hence option (5) is correct.

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