In an attempt to model house prices in a certain neighborhood in Oklahoma City, a real estate developer collected data on 58 houses. The data collected are price, area, number of floors, width of street, walking time to public transportation, is at the intersection of two streets or not, amount spent on flooring, alarm system, and central air conditioning.

He/She has thought of building two models:

Model1: Price is a function of area, number of floors, and amount spent on flooring.

Model2: Price is a function of area, number of floors, width of street, walking time to public transportation, is at the intersection of two streets or not, amount spent on flooring, alarm system, and central air conditioning.

1) Write a one-page report in which you present both models and explain which one should be used to estimate house prices in that neighborhood. The report should talk about the significance of the variables in both models also answer question 2) (below).

2) There is a problem with air conditioning and flooring because the cost of each one of them increases with an increase in the area of the house. How can you solve this problem?

 
 

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> 1 2 Housel 3 House2 4 House3 Price in Area in House thousands of square dollars feet 5 House4 6 Houses 7 House6 8 House? 9 House8 10 House9 11 House10 12 House11 13 House12 14 House13 15 House14 16 House15 17 House16 18 House17 19 House18 20 House19 21 House20 22 House21 23 House22 24 House23 25 House24 26 House25 27 House26 28 House27 29 House28 30 House29 31 House30 32 House31 33 House32 34 House33 35 House34 36 House35 37 House36 38 House37 39 House38 in B Ready 276 402 377 342 300 391 265 314 402 415 445 353 487 415 268 474 445 352 364 354 322 384 378 342 290 335 401 355 272 441 C 306 378 422 300 266 360 499 326 1500 2300 1900 1900 1500 2500 1500 1500 2400 2300 2400 1400 2500 2500 1200 2400 2400 1600 2400 1900 1400 2200 1800 1900 1400 2100 1900 1700 1200 2200 1400 1800 2500 1200 1300 1400 2500 1800 son! housepricepassage D Number of floors (0 if one floor, 1 if more than one floor) 1 0 1 0 OOOOOHOKOOHOOOHOOO 0 1 0 1 0 1 0 0 1 0 0 0 1 1 1 0 1 1 0 0 0 1 0 0 1 0 1 1 E Width of street in feet Sheet1 28888888888888888888 50 50 70 50 70 50 60 50 50 60 70 80 80 70 50 80 70 80 50 70 60 60 80 888 60 60 50 60 80 50 80 70 80 50 80 50 70 80 60 R.A. Walking time to public transportation in min F + 15 11 10 BHD352 13 9 14 12 13 12 12 12 6 7 7 8 13 15 10 8 7 7 8 13 14 14 7 15 9 6 7 5 6 12 15 11 xe 9 6 G At intersection Flooring of two streets (1 per ifat square intersection, 0 if foot in not) dollars 1 . 0 1 1 1 1 1 1 0000 0 1 0 1 1 1 0 1 1 1 1 1 1 0 1 0 1 1 1 0 0 1 0 0 0 1 H 3.54 1.4 2.36 1.24 3.85 2.96 1.35 3.95 2.14 3.76 3.71 2.09 2.18 1.82 3.17 3.6 2.66 2.26 2.44 1.14 2.14 2.61 3.91 1.22 1.63 2.78 1.78 1.31 1.36 1.22 3 1.9 3.6 1.86 3.76 1.2 3.26 2.78 Kan Alarm system (1 if has alarm, 0 if not) 1 1 1 1 1 1 0 0 1 1 0 1 1 1 0 1 0 0 1 0 1 0 1 0 0 0 0 1 0 0 0 0 1 0 0 1 0 0 J Central air conditioning (1 if has central AC, 0 ifnot) 0 1 1 1 0 1 0 1 0 1 1 1 0 0 n 1 0 0 1 0 0 1 1 0 0 0 1 1 1 1 0 1 1 0 1 0 0 1 0 > 1 2 Housel 3 House2 4 House3 Price in Area in House thousands of square dollars feet 5 House4 6 Houses 7 House6 8 House? 9 House8 10 House9 11 House10 12 House11 13 House12 14 House13 15 House14 16 House15 17 House16 18 House17 19 House18 20 House19 21 House20 22 House21 23 House22 24 House23 25 House24 26 House25 27 House26 28 House27 29 House28 30 House29 31 House30 32 House31 33 House32 34 House33 35 House34 36 House35 37 House36 38 House37 39 House38 in B Ready 276 402 377 342 300 391 265 314 402 415 445 353 487 415 268 474 445 352 364 354 322 384 378 342 290 335 401 355 272 441 C 306 378 422 300 266 360 499 326 1500 2300 1900 1900 1500 2500 1500 1500 2400 2300 2400 1400 2500 2500 1200 2400 2400 1600 2400 1900 1400 2200 1800 1900 1400 2100 1900 1700 1200 2200 1400 1800 2500 1200 1300 1400 2500 1800 son! housepricepassage D Number of floors (0 if one floor, 1 if more than one floor) 1 0 1 0 OOOOOHOKOOHOOOHOOO 0 1 0 1 0 1 0 0 1 0 0 0 1 1 1 0 1 1 0 0 0 1 0 0 1 0 1 1 E Width of street in feet Sheet1 28888888888888888888 50 50 70 50 70 50 60 50 50 60 70 80 80 70 50 80 70 80 50 70 60 60 80 888 60 60 50 60 80 50 80 70 80 50 80 50 70 80 60 R.A. Walking time to public transportation in min F + 15 11 10 BHD352 13 9 14 12 13 12 12 12 6 7 7 8 13 15 10 8 7 7 8 13 14 14 7 15 9 6 7 5 6 12 15 11 xe 9 6 G At intersection Flooring of two streets (1 per ifat square intersection, 0 if foot in not) dollars 1 . 0 1 1 1 1 1 1 0000 0 1 0 1 1 1 0 1 1 1 1 1 1 0 1 0 1 1 1 0 0 1 0 0 0 1 H 3.54 1.4 2.36 1.24 3.85 2.96 1.35 3.95 2.14 3.76 3.71 2.09 2.18 1.82 3.17 3.6 2.66 2.26 2.44 1.14 2.14 2.61 3.91 1.22 1.63 2.78 1.78 1.31 1.36 1.22 3 1.9 3.6 1.86 3.76 1.2 3.26 2.78 Kan Alarm system (1 if has alarm, 0 if not) 1 1 1 1 1 1 0 0 1 1 0 1 1 1 0 1 0 0 1 0 1 0 1 0 0 0 0 1 0 0 0 0 1 0 0 1 0 0 J Central air conditioning (1 if has central AC, 0 ifnot) 0 1 1 1 0 1 0 1 0 1 1 1 0 0 n 1 0 0 1 0 0 1 1 0 0 0 1 1 1 1 0 1 1 0 1 0 0 1 0

Answer rating: 100% (QA)

Real estate represents a significant portion of most peoples wealth and this is especially true for many homeowners in the United States According to the Survey of Consumer Finances by the Federal Res... View the full answer