A Realtor Wants to Predict and Compare the Prices of Homes

question 81

Essay

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 + β₁ Size + β₃ Loc1 + β₄ Loc2 + ε
Model C: Price = β₀ + β₁Size + β₂Age + β₃ Loc1 + β₄ Loc2 +ε
where,
Price = the price of a home (in $1,000s)
Size = the square footage (in sq.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.
Using Model B,compute the predicted price of a 2,500-square-foot home in Location 1.

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Definitions:

Working Conditions

The environment, physical and psychological, in which an employee works, including factors such as safety, hours, and ergonomics.

Physical Aspects

Physical aspects refer to the tangible features or characteristics of an object, person, or place that can be observed and measured.

Sanitary Facilities

Facilities designed to ensure cleanliness and hygiene, often including toilets, bathrooms, and systems for waste disposal.

Vicariously Liable

A legal principle where one party is held responsible for the actions or negligence of another party, often within the context of an employer-employee relationship.