Housing prices The following regression model was found for the houses in upstate New York considered in the chapter: P r i c e ^ = 20 , 986.09 − 7483.10 B e d r o o m s + 93.84 L i v i n g A r e a a) Find the predicted price of a 2 bedroom, 1000-sq-ft house from this model. b) The house just sold for $135,000. Find the residual corresponding to this house. c) What does that residual say about this transaction?

Question

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Answer 1

Textbook Question

Chapter 9, Problem 1E

Housing prices The following regression model was found for the houses in upstate New York considered in the chapter:

P r i c e ^ = 20 , 986.09 − 7483.10 B e d r o o m s + 93.84 L i v i n g A r e a

a) Find the predicted price of a 2 bedroom, 1000-sq-ft house from this model.
b) The house just sold for $135,000. Find the residual corresponding to this house.
c) What does that residual say about this transaction?

a.

Expert Solution

To determine

Find the predicted price of a 2 bedroom, 1,000 sq-ft house.

Answer to Problem 1E

The predicted price of a 2 bedroom, 1,000 sq-ft house in upstate New York is likely to be $99,859.89.

Explanation of Solution

Given info:

The regression model for the price of houses in upstate New York with respect to number of bedrooms and living area is given as:

Price^=20,986.09−7483.10 Bedrooms+93.84 Living Area.

Calculation:

The given regression equation is:

Price^=20,986.09−7483.10 Bedrooms+93.84 Living Area

Substitute Bedrooms=2 and Living Area=1,000 in the equation:

Price^=20,986.09−(7483.10×2)+(93.84×1,000)=20,986.09−14,966.2+93,840=99,859.89.

Thus, the predicted price of a 2 bedroom, 1,000 sq-ft house in upstate New York is likely to be $99,859.89.

b.

Expert Solution

To determine

Find the residual corresponding to a house that sold for $135,000.

Answer to Problem 1E

The residual corresponding to a house that sold for $135,000 is $35,140.11.

Explanation of Solution

Calculation:

Residual:

The residual corresponding to a predictor variable is given as the difference between actual value of the response variable and the predicted value. That is, e=y−y^, where y be the actual value of the response variable and y^ be the predicted value of the response variable for same predictor variable.

Put the actual value of ‘price’ as y=135,000 and the predicted value as y^=99,859.89.

Then,

e=135,000−99,859.89=35,140.11.

Thus, the residual corresponding to a house that sold for $135,000 is $35,140.11.

c.

Expert Solution

To determine

Explain what the residual says about the transaction.

Explanation of Solution

Justification:

The real price, at which the house is sold, is $135,000. The regression model predicted that the price of the house would be sold at $99,859.89.

The residual $35,140.11 means that the house is sold at a price of $35,140.11 more than what was predicted.

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Answer 2

Textbook Question

Chapter 9, Problem 1E

Housing prices The following regression model was found for the houses in upstate New York considered in the chapter:

P r i c e ^ = 20 , 986.09 − 7483.10 B e d r o o m s + 93.84 L i v i n g A r e a

a) Find the predicted price of a 2 bedroom, 1000-sq-ft house from this model.
b) The house just sold for $135,000. Find the residual corresponding to this house.
c) What does that residual say about this transaction?

a.

Expert Solution

To determine

Find the predicted price of a 2 bedroom, 1,000 sq-ft house.

Answer to Problem 1E

The predicted price of a 2 bedroom, 1,000 sq-ft house in upstate New York is likely to be $99,859.89.

Explanation of Solution

Given info:

The regression model for the price of houses in upstate New York with respect to number of bedrooms and living area is given as:

Price^=20,986.09−7483.10 Bedrooms+93.84 Living Area.

Calculation:

The given regression equation is:

Price^=20,986.09−7483.10 Bedrooms+93.84 Living Area

Substitute Bedrooms=2 and Living Area=1,000 in the equation:

Price^=20,986.09−(7483.10×2)+(93.84×1,000)=20,986.09−14,966.2+93,840=99,859.89.

Thus, the predicted price of a 2 bedroom, 1,000 sq-ft house in upstate New York is likely to be $99,859.89.

b.

Expert Solution

To determine

Find the residual corresponding to a house that sold for $135,000.

Answer to Problem 1E

The residual corresponding to a house that sold for $135,000 is $35,140.11.

Explanation of Solution

Calculation:

Residual:

The residual corresponding to a predictor variable is given as the difference between actual value of the response variable and the predicted value. That is, e=y−y^, where y be the actual value of the response variable and y^ be the predicted value of the response variable for same predictor variable.

Put the actual value of ‘price’ as y=135,000 and the predicted value as y^=99,859.89.

Then,

e=135,000−99,859.89=35,140.11.

Thus, the residual corresponding to a house that sold for $135,000 is $35,140.11.

c.

Expert Solution

To determine

Explain what the residual says about the transaction.

Explanation of Solution

Justification:

The real price, at which the house is sold, is $135,000. The regression model predicted that the price of the house would be sold at $99,859.89.

The residual $35,140.11 means that the house is sold at a price of $35,140.11 more than what was predicted.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Textbook Question

Chapter 9, Problem 1E

Housing prices The following regression model was found for the houses in upstate New York considered in the chapter:

P r i c e ^ = 20 , 986.09 − 7483.10 B e d r o o m s + 93.84 L i v i n g A r e a

a) Find the predicted price of a 2 bedroom, 1000-sq-ft house from this model.
b) The house just sold for $135,000. Find the residual corresponding to this house.
c) What does that residual say about this transaction?

a.

Expert Solution

To determine

Find the predicted price of a 2 bedroom, 1,000 sq-ft house.

Answer to Problem 1E

The predicted price of a 2 bedroom, 1,000 sq-ft house in upstate New York is likely to be $99,859.89.

Explanation of Solution

Given info:

The regression model for the price of houses in upstate New York with respect to number of bedrooms and living area is given as:

Price^=20,986.09−7483.10 Bedrooms+93.84 Living Area.

Calculation:

The given regression equation is:

Price^=20,986.09−7483.10 Bedrooms+93.84 Living Area

Substitute Bedrooms=2 and Living Area=1,000 in the equation:

Price^=20,986.09−(7483.10×2)+(93.84×1,000)=20,986.09−14,966.2+93,840=99,859.89.

Thus, the predicted price of a 2 bedroom, 1,000 sq-ft house in upstate New York is likely to be $99,859.89.

b.

Expert Solution

To determine

Find the residual corresponding to a house that sold for $135,000.

Answer to Problem 1E

The residual corresponding to a house that sold for $135,000 is $35,140.11.

Explanation of Solution

Calculation:

Residual:

The residual corresponding to a predictor variable is given as the difference between actual value of the response variable and the predicted value. That is, e=y−y^, where y be the actual value of the response variable and y^ be the predicted value of the response variable for same predictor variable.

Put the actual value of ‘price’ as y=135,000 and the predicted value as y^=99,859.89.

Then,

e=135,000−99,859.89=35,140.11.

Thus, the residual corresponding to a house that sold for $135,000 is $35,140.11.

c.

Expert Solution

To determine

Explain what the residual says about the transaction.

Explanation of Solution

Justification:

The real price, at which the house is sold, is $135,000. The regression model predicted that the price of the house would be sold at $99,859.89.

The residual $35,140.11 means that the house is sold at a price of $35,140.11 more than what was predicted.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Textbook Question

Chapter 9, Problem 1E

Housing prices The following regression model was found for the houses in upstate New York considered in the chapter:

P r i c e ^ = 20 , 986.09 − 7483.10 B e d r o o m s + 93.84 L i v i n g A r e a

a) Find the predicted price of a 2 bedroom, 1000-sq-ft house from this model.
b) The house just sold for $135,000. Find the residual corresponding to this house.
c) What does that residual say about this transaction?

a.

Expert Solution

To determine

Find the predicted price of a 2 bedroom, 1,000 sq-ft house.

Answer to Problem 1E

The predicted price of a 2 bedroom, 1,000 sq-ft house in upstate New York is likely to be $99,859.89.

Explanation of Solution

Given info:

The regression model for the price of houses in upstate New York with respect to number of bedrooms and living area is given as:

Price^=20,986.09−7483.10 Bedrooms+93.84 Living Area.

Calculation:

The given regression equation is:

Price^=20,986.09−7483.10 Bedrooms+93.84 Living Area

Substitute Bedrooms=2 and Living Area=1,000 in the equation:

Price^=20,986.09−(7483.10×2)+(93.84×1,000)=20,986.09−14,966.2+93,840=99,859.89.

Thus, the predicted price of a 2 bedroom, 1,000 sq-ft house in upstate New York is likely to be $99,859.89.

b.

Expert Solution

To determine

Find the residual corresponding to a house that sold for $135,000.

Answer to Problem 1E

The residual corresponding to a house that sold for $135,000 is $35,140.11.

Explanation of Solution

Calculation:

Residual:

The residual corresponding to a predictor variable is given as the difference between actual value of the response variable and the predicted value. That is, e=y−y^, where y be the actual value of the response variable and y^ be the predicted value of the response variable for same predictor variable.

Put the actual value of ‘price’ as y=135,000 and the predicted value as y^=99,859.89.

Then,

e=135,000−99,859.89=35,140.11.

Thus, the residual corresponding to a house that sold for $135,000 is $35,140.11.

c.

Expert Solution

To determine

Explain what the residual says about the transaction.

Explanation of Solution

Justification:

The real price, at which the house is sold, is $135,000. The regression model predicted that the price of the house would be sold at $99,859.89.

The residual $35,140.11 means that the house is sold at a price of $35,140.11 more than what was predicted.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Textbook Question

Answer 6

Textbook Question

Answer 7

a.

Expert Solution

To determine

Find the predicted price of a 2 bedroom, 1,000 sq-ft house.

Answer to Problem 1E

The predicted price of a 2 bedroom, 1,000 sq-ft house in upstate New York is likely to be $99,859.89.

Explanation of Solution

Given info:

The regression model for the price of houses in upstate New York with respect to number of bedrooms and living area is given as:

Price^=20,986.09−7483.10 Bedrooms+93.84 Living Area.

Calculation:

The given regression equation is:

Price^=20,986.09−7483.10 Bedrooms+93.84 Living Area

Substitute Bedrooms=2 and Living Area=1,000 in the equation:

Price^=20,986.09−(7483.10×2)+(93.84×1,000)=20,986.09−14,966.2+93,840=99,859.89.

Thus, the predicted price of a 2 bedroom, 1,000 sq-ft house in upstate New York is likely to be $99,859.89.

b.

Expert Solution

To determine

Find the residual corresponding to a house that sold for $135,000.

Answer to Problem 1E

The residual corresponding to a house that sold for $135,000 is $35,140.11.

Explanation of Solution

Calculation:

Residual:

The residual corresponding to a predictor variable is given as the difference between actual value of the response variable and the predicted value. That is, e=y−y^, where y be the actual value of the response variable and y^ be the predicted value of the response variable for same predictor variable.

Put the actual value of ‘price’ as y=135,000 and the predicted value as y^=99,859.89.

Then,

e=135,000−99,859.89=35,140.11.

Thus, the residual corresponding to a house that sold for $135,000 is $35,140.11.

c.

Expert Solution

To determine

Explain what the residual says about the transaction.

Explanation of Solution

Justification:

The real price, at which the house is sold, is $135,000. The regression model predicted that the price of the house would be sold at $99,859.89.

The residual $35,140.11 means that the house is sold at a price of $35,140.11 more than what was predicted.

Answer 8

a.

Expert Solution

To determine

Find the predicted price of a 2 bedroom, 1,000 sq-ft house.

Answer to Problem 1E

The predicted price of a 2 bedroom, 1,000 sq-ft house in upstate New York is likely to be $99,859.89.

Explanation of Solution

Given info:

The regression model for the price of houses in upstate New York with respect to number of bedrooms and living area is given as:

Price^=20,986.09−7483.10 Bedrooms+93.84 Living Area.

Calculation:

The given regression equation is:

Price^=20,986.09−7483.10 Bedrooms+93.84 Living Area

Substitute Bedrooms=2 and Living Area=1,000 in the equation:

Price^=20,986.09−(7483.10×2)+(93.84×1,000)=20,986.09−14,966.2+93,840=99,859.89.

Thus, the predicted price of a 2 bedroom, 1,000 sq-ft house in upstate New York is likely to be $99,859.89.

Answer 9

a.

Expert Solution

Answer 10

a.

Expert Solution

Answer 11

Expert Solution

Answer 12

To determine

Find the predicted price of a 2 bedroom, 1,000 sq-ft house.

Answer 13

Answer to Problem 1E

The predicted price of a 2 bedroom, 1,000 sq-ft house in upstate New York is likely to be $99,859.89.

Answer 14

Explanation of Solution

Given info:

The regression model for the price of houses in upstate New York with respect to number of bedrooms and living area is given as:

Price^=20,986.09−7483.10 Bedrooms+93.84 Living Area.

Calculation:

The given regression equation is:

Price^=20,986.09−7483.10 Bedrooms+93.84 Living Area

Substitute Bedrooms=2 and Living Area=1,000 in the equation:

Price^=20,986.09−(7483.10×2)+(93.84×1,000)=20,986.09−14,966.2+93,840=99,859.89.

Thus, the predicted price of a 2 bedroom, 1,000 sq-ft house in upstate New York is likely to be $99,859.89.

Answer 15

b.

Expert Solution

To determine

Find the residual corresponding to a house that sold for $135,000.

Answer to Problem 1E

The residual corresponding to a house that sold for $135,000 is $35,140.11.

Explanation of Solution

Calculation:

Residual:

The residual corresponding to a predictor variable is given as the difference between actual value of the response variable and the predicted value. That is, e=y−y^, where y be the actual value of the response variable and y^ be the predicted value of the response variable for same predictor variable.

Put the actual value of ‘price’ as y=135,000 and the predicted value as y^=99,859.89.

Then,

e=135,000−99,859.89=35,140.11.

Thus, the residual corresponding to a house that sold for $135,000 is $35,140.11.

Answer 16

b.

Expert Solution

Answer 17

b.

Expert Solution

Answer 18

Expert Solution

Answer 19

To determine

Find the residual corresponding to a house that sold for $135,000.

Answer 20

Answer to Problem 1E

The residual corresponding to a house that sold for $135,000 is $35,140.11.

Answer 21

Explanation of Solution

Calculation:

Residual:

The residual corresponding to a predictor variable is given as the difference between actual value of the response variable and the predicted value. That is, e=y−y^, where y be the actual value of the response variable and y^ be the predicted value of the response variable for same predictor variable.

Put the actual value of ‘price’ as y=135,000 and the predicted value as y^=99,859.89.

Then,

e=135,000−99,859.89=35,140.11.

Thus, the residual corresponding to a house that sold for $135,000 is $35,140.11.