1.The mean area of houses in a neighborhood is about 1600 sq.feet and the standa

Question

1.The mean area of houses in a neighborhood is about 1600 sq.feet and the standard deviation is about 150 sq.feet. The mean cost of houses is about 83000 dollars with a standard deviation of 4000 dollars. The correlation between area and cost is about 0.5. We want to predict the cost of a house with area 1700 sq.feet. The slope of the appropriate regression line is

A) 61666.7200
B) 13.3333
C) 47.9000
D) 0.0187

The intercept of the appropriate regression line is
A) 0.0187
B) 13.3333
C) 47.9000
D) 61666.7200

3. The predicted value of cost when the area is 1700 sq.feet is
A) 104833437
B) 84333
C) 85013

4.There are two data points, x1= area=1050 with y1=cost= 76067, and another pair with x2=1450 and y2=81800. If you use the regression line computed earlier then
A)The residual at x2 is equalto the residual at x1
B)The residual at x2 is smaller than the residual at x1
C) The residual at x2 is larger than the residual at x1

5.The regression line that you found out in this problem is
A) The regression line of area on cost
B) The regression line of cost on area
C) It does not matter both are the same

***Please answer all questions and include steps/explanations. I am really confused and would appreciate it. Thank you!

Explanation / Answer

1) The slope of the appropriate regression line is = (0.5*4000/150) = 13.3333

intercept of the appropriate regression lin = 83000-1600*13.3333 =  61666.7200

3. The predicted value of cost when the area is 1700 sq.feet is =  61666.7200+1700*13.3333 = 84333

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