Chapter 14, Problem 31SE

House Prices (Example 10) Figure A contains the selling price and area (in square feet) of 81 recently sold homes in a region where a buyer wants to purchase a home.

a. Use the equation to estimate the price of a home with 2500 square feet.

b. The buyer wants to know the uncertainty in the prices he might pay for a home with 2500 square feet in this region. Should he use a prediction interval or a confidence interval? Explain.

c. Report the correct 95% interval, confidence or prediction as determined in part b, for the predicted price. See Figure B.

d. The buyer has prequalified for a loan up to $\text{\$}400,000.$ Is he likely to be able to afford a house in this area with 2500 square feet?