Chapter 25, Problem 11E

Interpretations A regression performed to predict the selling price of houses found the equation

$\widehat{Price}=169,328+35.3Area+0.718Lotsize-6543Age$

where Price is in dollars, Area is in square feet, Lotsize is in square feet, and Age is in years. The R² is 92%. One of the interpretations below is correct. Which is it? Explain what’s wrong with the others.

1. a) Each year a house Ages it is worth $6543 less.
2. b) Every extra square foot of Area is associated with an additional $35.30 in average price, for houses with a given Lotsize and Age.
3. c) Every dollar in price means Lotsize increases 0.718 square feet.
4. d) This model fits 92% of the data points exactly.