Question

The data show the list and selling prices for several expensive homes. Find the regression​ equation, letting the the list price be the independent​ (x) variable. Find the best predicted selling price of a home having a list price of ​$2 million. Is the result close to the actual selling price of $1.7 ​million? Use a significance level of 0.05.

List price__Selling price
4.4_____4.7
2.1_____1.7
4.5______4
3.4______3
1.9_____1.7
2.2_____1.7

Answer 1

Independent variable (X): List Price

Dependent variable (Y): Selling price

Following table shows the calculations:

	X	Y	X^2	Y^2	XY
	4.4	4.7	19.36	22.09	20.68
	2.1	1.7	4.41	2.89	3.57
	4.5	4	20.25	16	18
	3.4	3	11.56	9	10.2
	1.9	1.7	3.61	2.89	3.23
	2.2	1.7	4.84	2.89	3.74
Total	18.5	16.8	64.03	55.76	59.42

The predicted value is $1.62 million and it is close to actual value $1.7 million

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Test for significance for correlation:

Conclusion: We can conclude that there is a significant relationship between the variables.