House price y is estimated as a function of the square footage of a house x and

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

Compute the predicted price (in $1,000s) of a house with ocean views and square footage of 2,000.(Do not round intermediate calculations. Round your answer to 2 decimal places.)

Compute the predicted price (in $1,000s) of a house with ocean views and square footage of 3,000.(Do not round intermediate calculations. Round your answer to 2 decimal places.)

Compute the predicted price (in $1,000s) of a house without ocean views and square footage of 2,000. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Compute the predicted price (in $1,000s) of a house without ocean views and square footage of 3,000. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

An ocean view increases the value of house price by approximately 10% at the given level (52.6 thousand dollars)

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

Explanation / Answer

y-hat = 118.90 + 0.12x + 52.60d.

1) Y = 118.90 + 0.12*2000 + 52.60 *1

Y = 411.5

2)

Y = 118.90 + 0.12*3000 + 52.60 *1

Y = 531.5

3)

Y = 118.90 + 0.12*2000 + 52.60 *0

Y = 358.9

4)

Y = 118.90 + 0.12*3000 + 52.60 *0

Y = 478.9

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