A Regression Equation That Predicts the Price of Homes in Thousands

question 152

Multiple Choice

A regression equation that predicts the price of homes in thousands of dollars is _t = 24.6 + 0.055x₁ - 3.6x₂,where x₂ is a dummy variable that represents whether the house in on a busy street or not.Here x₂ = 1 means the house is on a busy street and x₂ = 0 means it is not.Based on this information,which of the following statements is true?

• A)On average,homes that are on busy streets are worth $3600 less than homes that are not on busy streets.
• B)On average,homes that are on busy streets are worth $3.6 less than homes that are not on busy streets.
• C)On average,homes that are on busy streets are worth $3600 more than homes that are not on busy streets.
• D)On average,homes that are on busy streets are worth $3.6 more than homes that are not on busy streets.

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