Exhibit 17

question 43

Essay

Exhibit 17.8.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 + β₁Size + β₂Age + ε,
Model B: Price = β₀ + β₁Size + β₂Loc1 + β₃Loc2 + ε,
Model C: Price = β₀ + β₁Size + β₂Age + β₃Loc1 + β₄Loc2 + ε,
where,
Price = the price of a home (in $thousands),
Size = the square footage (in square 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.

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Definitions:

Marine Fossils

Remains of marine organisms that have been preserved in sedimentary rock.

Deformation

The process of change in the shape or size of rocks in response to stress, leading to folding, faulting, or shearing.

Subsidence

The gradual sinking or settling of the Earth's surface, which can result from natural processes such as erosion or human activities like mining.

Uplift

The vertical elevation of the Earth's surface due to natural processes like tectonic movements, leading to mountain building and other geological features.