A Regression Equation That Predicts the Price of Homes in Thousands

question 7

Multiple Choice

A regression equation that predicts the price of homes in thousands of dollars is t = 24.6 + 0.055x1 - 3.6x2, where x2 is an indicator variable that represents whether the house is on a busy street (1 = yes, 0 = no) . Based on this information, which of the following statements is true?

• A) On average, homes that are on busy streets are worth $3600 less than homes that are not on busy streets.
• B) On average, homes that are on busy streets are worth $3.60 less than homes that are not on busy streets.
• C) On average, homes that are on busy streets are worth $3600 more than homes that are not on busy streets.
• D) On average, homes that are on busy streets are worth $3.60 more than homes that are not on busy streets.
• E) None of the above is correct.