Question

The accompanying table shows a portion of a data set that refers to the property taxes owed by a homeowner (in $) and the size of the home (in square feet) in an affluent suburb 30 miles outside New York City.

Taxes	Size
21922	2446
17362	2521
18285	1732
15662	1039
43973	5633
33629	2523
15195	2163
16693	1938
18247	2061
16036	1267
15163	1306
36002	3034
31043	2880
42063	3376
14432	1491
38914	3943
25383	3930
22991	2390
16236	3511
29263	2828

a. Estimate the sample regression equation that enables us to predict property taxes on the basis of the size of the home. (Round your answers to 2 decimal places.)

TaxesˆTaxes^  = ______ + ______ Size.

b. Interpret the slope coefficient.

• As Property Taxes increase by 1 dollar, the size of the house increases by 6.86 ft.

• As Size increases by 1 square foot, the property taxes are predicted to increase by $6.86.

c. Predict the property taxes for a 1,500-square-foot home. (Round coefficient estimates to at least 4 decimal places and final answer to 2 decimal places.)

  TaxesˆTaxes^ ________

Answer 1

Using Excel, (Data -> Data Analysis -> Regression), we get the following output -

a) The estimated sample regression equation that enables us to predict property taxes on the basis of the size of the home is

b) As Size increases by 1 square foot, the property taxes are predicted to increase by $6.86.

c) The predicted property taxes for a 1,500-square-foot home

= 6581.7 + (6.86*1500)

= 16871.7