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:

Married Taxpayers

Couples legally married who can choose to file joint or separate tax returns, which can affect their tax liabilities and benefits.

Tax Liability

The total amount of tax owed to a taxing authority based on the taxable income of an individual or corporation.

Taxable Income

The amount of income used to calculate an individual's or a company's income tax due, determined by subtracting deductions and exemptions from total income.

Tax Liability

The total amount of taxes owed by an individual, corporation, or other entity to taxing authorities, such as the federal or state government, based on income, property value, or other taxable assets.