A real estate company wants to study the relationship between house sales prices

Question

A real estate company wants to study the relationship between house sales prices and some important predictors of sales prices Based on data from recently sold homes in the area, the variables y = sales price (in thousands of dollars) x = total floor area (in square feet) number of bedrooms xdistance to nearest high school (in miles) are used in a multiple regression model. The estimated model is y = 180 + 0.08, +18x2-5x3 Answer the folowing questions for the interpretation of the coefficient of x3 in this model. Holding the other variables fixed, what is the average change in sales price for each additional mile from a house to the nearest high school? Is this change an increase or a decrease? Clear Undo Help Next >> Explain Type here to search

Explanation / Answer

a) For each unit increase of x3 variable, there is a change of 5000

b) This change is decrease because x3 has negative coefficient

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