In this exercise we study the nature of the interaction between x1, square footage, and x2, rating.
a. Consider all houses with a rating of 2. In this case, predicted sales price is (using the least squares point estimates in Figure 15.11)

Calculate Å· when x1 = 13 and 22. Plot Å· versus x1, for x1 = 13 and 22.
b. Consider all houses with a rating of 8. In this case, predicted sales are (using the least squares point estimates in Figure 15.11)

Calculate Å· when x1 = 13 and 22. Plot Å· versus x1, for x1 = 13 and 22.
c. By comparing the plots you made in a and b, discuss the nature of the interaction between x1 and x2.

Transcribed Image Text:

27.438 + 5.0813지 + 7.2899(2)-.53 11(2)2 + .1 1473x1(2) 27.438 + 5.081 3x, + 7.2899(8)-,5311 (8)2 + .11 473x08)