A Researcher Has Developed the Following Regression Equation to Predict

question 127

Multiple Choice

A researcher has developed the following regression equation to predict the prices of luxurious Oceanside condominium units, = 40 + 0.15Size + 50View, where Price is the price of a unit (in $1,000s) , Size is the square footage (in sq. feet) , and View is a dummy variable taking on 1 for an ocean view unit and 0 for a bay view unit. Which of the following is the predicted price of a bay view unit measuring 1,500 square feet?

• A) $315,000
• B) $50,000
• C) $265,000
• D) $40,000

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Definitions:

Equilibrium Price

The price at which the quantity of a good demanded by consumers equals the quantity supplied by producers, leading to market balance.

Equilibrium Quantity

The quantity of goods or services that is supplied and demanded at the equilibrium price.

Supply and Demand

Fundamental economic concepts where supply represents how much the market can offer, and demand represents how much of a product or service is desired by buyers.

Supply and Demand

Economic principles stating that the price of a good is determined by its availability (supply) and consumers' desire to purchase it (demand).