How does the price of a house depend on its size? Data from Saratoga, New York, on 1064 randomly selected houses that had been sold include data on price ($ 1000s) and size ($ 1000s ft2), producing the following graphs and computer output:

Dependent variable is Price
R-squared = 59.5%
s = 53.79 with 1064 - 2 = = 1062 degrees of freedom
Variable Coefficient SE (Coeef) t-Ratio P-Value
Intercept -3.11686 4.688 -0.655 0.5063
Size 94.4539 2.393 39.5 ‰¤0.0001

a) Explain in context what the regression says.
b) The intercept is negative. Discuss its value, taking note of its P-value.
c) The output reports s = 53.79. Explain what that means in this context.
d) What's the value of the standard error of the slope of the regression line?
e) Explain what that means in this context.

Transcribed Image Text:

800 600 2 400t 200 125 2.50 3 5.00 Size (1000tt2 300 50 -150 125 250 375 500 Predicted 400 300 20아 100 300-50 200 Residuals ($1000s)