Refer to Exercise 13 12 The analyst proposed the following variable
Refer to Exercise 13.12. The analyst proposed the following variable to describe the type of roof on the home:
a. Discuss any problems with this variable.
b. How could type of roof be included in the model so as not to pose the problems associated with the above definition.
In exercise
A business analyst at a major real estate firm wants to build a regression model that will predict the price of a single- family home based on a number of explanatory variables. The real estate firm’s data base has an enormous amount of information on selling prices of homes and potential variables that are related to that price. After a number of discussions with experienced realtors, you decide to model price of a home as a function of the following variables: size of home in terms of floor space, lot size, number of bathrooms, number of bedrooms, age of home, garage size, number of months home has been on the market, distance to nearest elementary school, type of neighborhood, traffic volume on street, and racial mixture of neighborhood.
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