13th Edition

ISBN: 8220101456380

Author: Anderson

Publisher: CENGAGE L

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Statistics is the study of data collection, organization, analysis, interpretation, and presentation. Statistical bias is a characteristic of a statistical technique or its findings in which the expected value deviates from the actual root quantitative p…

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Textbook Question

Chapter 14.8, Problem 49E

In 2011 home prices and mortgage rates dropped so low that in a number of cities the monthly cost of owning a home was less expensive than renting. The following data show the average asking rent for 10 markets and the monthly mortgage on the median priced home (including taxes and insurance) for 10 cities where the average monthly mortgage payment was less than the average asking rent (The Wall street Journal, November 26-27, 2011).

City	Rent ($)	Mortgage ($)
Atlanta	840	539
Chicago	1062	1002
Detroit	823	626
Jacksonville, Fla.	779	711
Las Vegas	796	655
Miami	1071	977
Minneapolis	953	776
Orlando, Fla.	851	695
Phoenix	762	651
St. Louis	723	654

a. Develop the estimated regression equation that can be used to predict the monthly mortgage given the average asking rent.
b. Construct a residual plot against the independent variable.
c. Do the assumptions about the error term and model form seem reasonable in light of the residual plot?

Features Features Normal distribution is characterized by two parameters, mean (µ) and standard deviation (σ). When graphed, the mean represents the center of the bell curve and the graph is perfectly symmetric about the center. The mean, median, and mode are all equal for a normal distribution. The standard deviation measures the data's spread from the center. The higher the standard deviation, the more the data is spread out and the flatter the bell curve looks. Variance is another commonly used measure of the spread of the distribution and is equal to the square of the standard deviation.

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Chapter 14 Solutions

EBK STATISTICS FOR BUSINESS & ECONOMICS

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Solution Summary: The author explains how to obtain an estimated regression equation to predict the monthly mortgage given the average asking rant.

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Chapter 14 Solutions