# Question: The following model was fitted to explain the selling prices

The following model was fitted to explain the selling prices of condominiums in a sample of 815 sales:

where

y` = selling price of condo, in dollars

x1 = square footage of living area

x2 = size of garage, in number of cars

x3 = age of condo, in years

x4 = dummy variable taking the value 1 if the condo has a fireplace and 0 otherwise

x5 = dummy variable taking the value 1 if the condo has hardwood floors and 0 if it has vinyl floors

a. Interpret the estimated coefficient of x4.

b. Interpret the estimated coefficient of x5.

c. Find a 95% confidence interval for the impact of a fireplace on selling price, all other things being equal.

d. Test the null hypothesis that type of flooring has no impact on selling price against the alternative that, all other things equal, condos with hardwood floors have a higher selling price than those with vinyl flooring.

where

y` = selling price of condo, in dollars

x1 = square footage of living area

x2 = size of garage, in number of cars

x3 = age of condo, in years

x4 = dummy variable taking the value 1 if the condo has a fireplace and 0 otherwise

x5 = dummy variable taking the value 1 if the condo has hardwood floors and 0 if it has vinyl floors

a. Interpret the estimated coefficient of x4.

b. Interpret the estimated coefficient of x5.

c. Find a 95% confidence interval for the impact of a fireplace on selling price, all other things being equal.

d. Test the null hypothesis that type of flooring has no impact on selling price against the alternative that, all other things equal, condos with hardwood floors have a higher selling price than those with vinyl flooring.

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