A researcher determines the regression model between price i

A researcher determines the regression model between price (in thousand of dollars) of a house for sale in albuquerque and the size in square feet is: Price = 47.82 + 0.062 Size. What price would you predict for a house with 300 square feet? A real estate agent shows the potential buyer a 1200 square foot home, saying the asking prise is 6000 dollars less than what one would expect to pay for a house of this size. What is the expected price, based on the regression model? What is the asking price, knowing that it\'s dollar 6000 less than the expected price?

Solution

price = 47.82 + 0.061 size

A) size = 3000 given

just put this in equation

47.82+0.061*3000 = 230.82

but the price is in thousand therefore 230.82*1000 = 230820

B)expected prize will be when we put 1200 in place of size

47.82+0.061*1200 = 121.02

121.02*1000 = 121020 will be the expected price

c) as 6000 is less from expected price will be the asking price = 121020 - 6000 = 115020