Question

In: Statistics and Probability

The accompanying table shows a portion of a data set that refers to the property taxes...

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^ ________

Solutions

Expert Solution

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


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