Question

 

The table below contains information on 48 houses: the value of the house and the amount of rental income in a year that the house brings in ("Capital and rental," 2013).

Table: Data of House Value versus Rental

Value	Rental	Value	Rental	Value	Rental	Value	Rental
81000	6656	77000	4576	75000	7280	67500	6864
95000	7904	94000	8736	90000	6240	85000	7072
121000	12064	115000	7904	110000	7072	104000	7904
135000	8320	130000	9776	126000	6240	125000	7904
145000	8320	140000	9568	140000	9152	135000	7488
165000	13312	165000	8528	155000	7488	148000	8320
178000	11856	174000	10400	170000	9568	170000	12688
200000	12272	200000	10608	194000	11232	190000	8320
214000	8528	208000	10400	200000	10400	200000	8320
240000	10192	240000	12064	240000	11648	225000	12480
289000	11648	270000	12896	262000	10192	244500	11232
325000	12480	310000	12480	303000	12272	300000	12480

Answer 1

Question 1 options:

The table below contains information on 48 houses: the value of the house and the amount of rental income in a year that the house brings in ("Capital and rental," 2013).

Table: Data of House Value versus Rental

Value	Rental	Value	Rental	Value	Rental	Value	Rental
81000	6656	77000	4576	75000	7280	67500	6864
95000	7904	94000	8736	90000	6240	85000	7072
121000	12064	115000	7904	110000	7072	104000	7904
135000	8320	130000	9776	126000	6240	125000	7904
145000	8320	140000	9568	140000	9152	135000	7488
165000	13312	165000	8528	155000	7488	148000	8320
178000	11856	174000	10400	170000	9568	170000	12688
200000	12272	200000	10608	194000	11232	190000	8320
214000	8528	208000	10400	200000	10400	200000	8320
240000	10192	240000	12064	240000	11648	225000	12480
289000	11648	270000	12896	262000	10192	244500	11232
325000	12480	310000	12480	303000	12272	300000	12480

1. Which of the two scatter plots displayed in the image above the problem script correctly depicts rental income as a function of house value?

Enter letter corresponding to correct plot

2. Use technology to determine regression equation between house value and rental income.

Enter regression equation in the format as follows:

y^=a+bx

with slope rounded to nearest thousandth and y-intercept value rounded to nearest integer. Examples of correctly entered answers:

y^=-4210+.348x

y^=67553-1.242x

Linear regression equation calculator:

Correlation and Linear Regression Calculator Applet

3. Use the regression equation to find the rental income from a house worth $230,000

Enter amount to nearest dollar; do not include dollar sign, commas, or units of measure

4. Use the regression equation to find the rental income from a house worth $400,000

Enter amount to nearest dollar; do not include dollar sign or units of measure

5. Which rental income that you calculated do you think is closer to the true rental income?

A. $10884, since house value producing this annual rental income would fall within range of house value data (rental income value is interpolated)

B. Both calculations are equally accurate since they are calculated using the same regression equation

C. $14964, since annual rental income is extrapolated

Enter letter corresponding to correct answer

Answers

1. Plot A describes rental income as a function of house value, as in a graph we put the 'independent factor' at the X axis, and the dependent factor on the Y axis.

2. Using MINITAB we have calculated the regression equation :

  

One can use scientific calculator or any other tehnology.

3. putting x=230000 in the above equation, we get the desired rental value as 10884

4.similarly rent for house value 400000 is : 14964