Use the information below to answer questions 34 A county re

Use the information below to answer questions #3-#4

A county real estate appraiser wants to develop a statistical model to predict the appraised value of houses in a section of the county called East Meadow. One of the many variables thought to be an important predictor of appraised value is the number of rooms in the house. Consequently, the appraiser decided to fit the simple linear regression model: Y = ₀ + ₁x, where y = appraised value of the house (in thousands of dollars) and x = number of rooms. Using data collected for a sample of n = 74 houses in East Meadow, the following results were obtained: = 74.80 + 21.66x

Give a practical interpretation of the estimate of the slope of the least squares line.

a) For each additional room in the house, we estimate the appraised value to increase $21,660.

b) For each additional room in the house, we estimate the appraised value to increase $74,800.

c) For each additional dollar of appraised value, we estimate the number of rooms in the house to increase by 21.66.

d) For a house with 0 rooms, we estimate the appraised value to be $74,800.

Give a practical interpretation of the estimate of the y-intercept of the least squares line.

a) For each additional room in the house, we estimate the appraised value to increase $74,800.

b) For each additional room in the house, we estimate the appraised value to increase $21,660.

c) We estimate the base appraised value for any house to be $74,800.

d) There is no practical interpretation, since a house with 0 rooms is nonsensical

Solution

1. a) For each additional room in the house, we estimate the appraised value to increase $21,660.

2. c) We estimate the base appraised value for any house to be $74,800.