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:

Innate Needs

Fundamental, biologically driven requirements essential for survival and psychological development, such as needs for food, safety, and belonging.

Personal Orientation Inventory

A psychological assessment tool used to measure personal values and behaviors indicative of self-actualization and personal growth.

Projective Technique

A psychological testing method where individuals project their own attributes, thoughts, and feelings through interpretations or responses to ambiguous stimuli.

Time Competence

The ability to live in and appreciate the present moment while making rational decisions based on both current reality and future possibilities.