A real estate agent wishes to estimate the monthly rental fo

A real estate agent wishes to estimate the monthly rental for apartments based on the size (square feet) and location of the apartments. She chose the model y = beta_0 + beta_1X_1 + beta_2X_2 + epsilon where X_1 represents the square footage of the apartment and x_2 = {1 if located in town center 0 if not located in town center This linear regression model was fitted to a sample of size 50 to produce the regression equation below. Complete parts a through c. y = 145 + 1.1x_1 + 350x_2 Interpret b_2 in the context of this exercise Based on these data, and holding the constant, it is estimated that an apartment is worth $ more if it located in the town center.

Solution

area (square footage) constant, it is estimated that an apartment is worth $350 more if it is located in the town center