An economist wishes to predict the market value of owner-occupied homes in small midwestern cities. She has collected a set of data from 45 small cities for a 2-year period and wants you to use these as the data source for the analysis. The data are stored in the file Citydatr. She wants you to develop two prediction equations: one that uses the size of the house as a predictor and a second that uses the tax rate as a predictor.
a. Plot the market value of houses (hseval) versus the size of houses (sizense), and then versus the tax rates (taxrate). Note any unusual patterns in the data.
b. Prepare regression analyses for the two predictor variables. Which variable is the stronger predictor of the value of houses?
c. A business developer in a midwestern state has stated that local property tax rates in small towns need to be lowered because if they are not, no one will purchase a house in these towns. Based on your analysis in this problem, evaluate the business developer's claim.

  • CreatedJuly 07, 2015
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