Exhibit 17

question 86

Short Answer

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. Note: The values of relevant test statistics are shown in parentheses below the estimated coefficients.
Refer to Exhibit 17.8.Using Model B,what is the predicted price of a 2,500 square feet home in Location 1?

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Definitions:

Genetic Explanations

Theories or interpretations that account for certain traits, behaviors, or conditions primarily in terms of genetic factors or inheritance.

Deviation IQ Scores

A method of calculating IQ by comparing an individual’s test score with the average scores of others in the same age group.

Raw IQ Scores

The initial, unadjusted scores obtained directly from IQ tests before any age-related adjustments or standardization.

Normal Distribution

A statistical function that represents the distribution of many types of data; most values are centered around a mean value, creating a symmetrical bell-shaped curve.