Question: Homework Assignment 1 (Mini Case -Big P House[1]) The housing market is of significant interest in the U.S. economy these days, with concerns of another
Homework Assignment 1 (Mini Case -Big P House[1])
The housing market is of significant interest in the U.S. economy these days, with concerns of another meltdown in housing prices and the possibility of a snowballing effect leading the entire economy into a recession. How are housing prices determined anyway? Economic factors of supply and demand (e.g., interest rates, availability of credit, tax rates) certainly affect housing prices. Even when these factors are accounted for, house prices vary significantly as features, such as area in square feet, age, and number of bedrooms, are different.
To study how important (and unimportant) these basic features of the house, a random sample of 21 houses in Big P was selected and their prices (in $K), area in square feet, age in years, and the number of bedrooms were recorded. The data is collected in an Excel file, "Big P_House.xlsx." The following set of tasks asks you to walk through the statistical modeling process using the data set.
Step (1)Preliminary Analysis using scatter plot: Use scatter diagrams to hypothesize a model which uses all independent variables (i.e., sq. ft., age (in years), and the number of bedrooms. (Hint: run the regression model of
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