Question: For recent data in Jacksonville, Florida, on y = selling price of home (in dollars), x1 =size of home (in square feet), and x2 =

For recent data in Jacksonville, Florida, on y = selling price of home (in dollars), x1 =size of home (in square feet), and x2 = lot size (in square feet), the prediction equation is ˆy = −10,536 + 53.8x1 + 2.84x2.

(a) A particular home of 1240 square feet on a lot of 18,000 square feet sold for $145,000. Find the predicted selling price and the residual, and interpret.

(b) For fixed lot size, how much is the house selling price predicted to increase for each square-foot increase in home size? Why?

(c) According to this prediction equation, for fixed home size, how much would lot size need to increase to have the same impact as a one-square-foot increase in home size?

(d) Suppose house selling prices are changed from dollars to thousands of dollars. Explain why the prediction equation changes to ˆy = −10.536 + 0.0538x1 + 0.00284x2.

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