2. Data were collected from a random sample of home sales from a particular community in 2003. Let denote the sales price (in $1000s), denote the number of bedrooms, denote the number of bathrooms, denote the size of the house (in square feet), denote the lot size (in square feet), and denote the age of the house (in years). Regression estimation yielded the following results (standard errors in parentheses):

(10.8)(0.238)(6.2)(0.019)(0.001)(0.049)

n=220,R²=0.91

a. [0.32 points] Provide a clear interpretation of the constant term (119.2) in this model (what does this value mean?).

b. [0.32 points] Carry out a t-test of the statistical significance of at the 5% level of significance, using a critical t-value of 1.96. What should you conclude?

c. [0.32 points] Suppose that a homeowner converts a large closet in her house into a new bathroom. What is the expected increase in the value of her house, assuming no other changes are made? [Don't forget that the dependent variable is measured in $1000s!]

d. [0.32 points] Suppose that a homeowner adds a new bedroom to her house, which increases the size of the house by 120 square feet. What is the expected increase in the value of her house, assuming no other changes are made?