House price y s estimated as a function of the square footag

House price y s estimated as a function of the square footage of a house x and a dummy variable d that equals 1 if the house has ocean views. The estimated house price, measured in S1,000s, is given by y-hat 120.33 0.15x 55.28d. a-1. Compute the predicted price (in $1,000s) of a house with ocean views and square footage of 2,000. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Predicted price a-2. Compute the predicted price (in $1,000s) of a house with ocean views and square footage of 3,000. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Predicted price b-1. Compute the predicted price (in $1,000s) of a house without ocean views and square footage of 2,000. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Predicted price b-2. Compute the predicted price (in $1,000s) of a house without ocean views and square footage of 3,000. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Predicted price c. Discuss the impact of ocean views on the house price. o Ocean view increases price by 20+% or decreases by 55.28 thousand dollars An ocean view increases the value of house price by approximately 10% the given level (55.28 thousand dollars)

Solution

y hat = 120.33+0.15x+55.28d

a1) d= 1 and x = 2000

Plug in to get y = 420.33+55.28

= 475.61

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a2) x =3000 and d =1

y = 625.61

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b1) d=0 and x = 2000

y = price = 420.33

b2) x=3000 and d=0

y = price = 570.33

c) option 2