A Real Estate Agent Developed a Model to Relate a House's

question 63

Multiple Choice

A real estate agent developed a model to relate a house's selling price (Y) to the area of floor space (X) and the area of floor space squared (X²) . The multiple regression equation for this model is: Y = 125 - 3X + X²
where: Y = selling price (times $1,000)
X = square feet of floor space (times 100)
What is the selling price of a house with 2,000 square feet? ______

• A) $305 000
• B) $125 000
• C) $300 000
• D) $465 000

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Definitions:

Special-Interest Effect

A phenomenon where policy decisions are disproportionately influenced by small, well-organized groups at the expense of the larger public interest.

Concentrated Benefit

Concentrated benefit refers to situations in economic policy where a particular policy's benefits are received by a relatively small, identifiable group, while the costs are diffused across a large group.

Principal-Agent Problem

An economic conflict where an individual (the agent) has the responsibility to act for the benefit of another party (the principal), but might fail to do so because of differing interests.