A Realtor Wants to Predict and Compare the Prices of Homes

question 12

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 difference between the price of homes with the same square footage located in Location 2 and Location 3.

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Definitions:

Anteflexion

A position where an organ is bent forward toward the front of the body.

Retroflexion

A condition or posture where an organ is bent backward on itself, creating an angle with its usual axis.

Anteversion

A position where an organ, such as the uterus, is tilted forward.

Retroversion

A condition where an organ, such as the uterus, is tilted backward instead of its normal position.