Figure A contains the selling price and area (in square feet) of 81 recently sold homes in a region where a buyer wants to purchase a home.
a. Use the equation to estimate the price of a home with 2500 square feet.
b. The buyer wants to know the uncertainty in the prices he might pay for a home with 2500 square feet in this region. Should he use a prediction interval or a confidence interval? Explain.

c. Report the correct 95% interval, confidence or prediction as determined in part b, for the predicted price. See Figure B.
d. The buyer has prequalified for a loan up to $400,000. Is he likely to be able to afford a house in this area with 2500 square feet?

Transcribed Image Text:

500,000 Price 16209101.9 Area 400,000 300,000 200,000- 100,000 500 1000 1500 2000 2500 3000 3500 Area (square feet) Predicted Values for New Observations obs Tit SE Fit 95% CI 1 271056 10085 (250975, 291138) (160581, 381532) 95% PI Values of Prediotors for Bew Obeervations Cbs Area 1 2500