An agent for a residential real estate company in a suburb located outside of Washington, DC, has the business objective of developing more accurate estimates of the monthly rental cost for apartments. Toward that goal, the agent would like to use the size of an apartment, as defined by square footage to predict the monthly rental cost. The agent selects a sample of 48 one bedroom apartments and collects and stores the data in RentSilverSpring.
a. Construct a scatter plot.
b. Use the least squares method to determine the regression coefficients b0 and b1.
c. Interpret the meaning of b0 and b1 in this problem.
d. Predict the mean monthly rent for an apartment that has 800 square feet.
e. Why would it not be appropriate to use the model to predict the monthly rent for apartments that have 1,500 square feet?
f. Your friends Jim and Jennifer are considering signing a lease for a one bedroom apartment in this residential neighborhood. They are trying to decide between two apartments, one with 800 square feet for a monthly rent of $ 1,130 and the other with 830 square feet for a monthly rent of $ 1,410. Based on (a) through (d), which apartment do you think is a better deal?