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:

Wealth

An abundance of valuable resources or material possessions.

Happiness

A state of well-being and contentment, characterized by emotions ranging from contentment to intense joy.

Communication Skills

The ability to convey or exchange information effectively through various forms such as verbal, non-verbal, written, and visual.

Final Remarks

The concluding comments or observations at the end of a discourse or document.