A Realtor Wants to Predict and Compare the Prices of Homes

question 40

Essay

A realtor wants to predict and compare the prices of homes in three neighboring locations. She considers the following linear models:
Model A: Price = β₀ + β₁ Size + β₂ Age + ε
Model B: Price = β₀ + β₁ Size + β₃ Loc1 + β₄ Loc2 + ε
Model C: Price = β₀ + β₁ Size + β₂ Age + β₃ Loc1 + β₄ Loc2 + ε
where,
Price = the price of a home (in $1,000s)
Size = the square footage (in sq. feet)
Loc1 = a dummy variable taking on 1 for Location 1, and 0 otherwise
Loc2 = a dummy variable taking on 1 for Location 2, and 0 otherwise
After collecting data on 52 sales and applying regression, her findings were summarized in the following table. Note: The values of relevant test statistics are shown in parentheses below the estimated coefficients.
What is the regression equation for model B?

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Definitions:

Self-enhancement

The motivation or tendency to maintain or enhance one's positive self-view through actions or beliefs.

Excessive Self-confidence

An overinflated sense of one's abilities or worth, potentially leading to risky or misguided decisions.

Participative Leadership

A leadership style that involves soliciting input, ideas, and opinions from team members and incorporating them into decision-making processes to foster collaboration and engagement.

Intolerance

The unwillingness to accept views, beliefs, or behaviors that differ from one's own.