Suppose Isabella has developed the following fitted regression equation for the price of a Edmonton condo: Price= 151000 + 47*(Square footage)

Question

a) If someone wants to purchase a 700 sq. ft. Edmonton condo, how much should they expect to pay?

b) If they want to buy a unit that is 89 square feet bigger, then how much more money should they expect to pay?

c) Would the intercept be meaningful if this regression represents the average Edmonton condo (when square footage is 0)? Yes or No

Answer 1

To determine the predicted value (price) for a particular input value (square footage) you plug in the input value and compute the predicted value.

a) plug in 700 for square footage then compute price

b) plug in 789 for square footage then compute price, then subtract price computed in a)

c) it wouldn't be meaningful in the sense that the square footage is never zero.