# You want to develop a model to predict the taxes of houses, based on assessed value. A sample of 30 single family houses listed for sale in Silver Spring, Maryland, a suburb of Washington, DC, is selected. The taxes (in $) and the assessed value of the houses (in $ thousands) are recorded and stored in SilverSpring. a. Construct a

You want to develop a model to predict the taxes of houses, based on assessed value. A sample of 30 single family houses listed for sale in Silver Spring, Maryland, a suburb of Washington, DC, is selected. The taxes (in $) and the assessed value of the houses (in $ thousands) are recorded and stored in SilverSpring.

a. Construct a scatter plot and, assuming a linear relationship, use the least squares method to compute the regression coefficients b_{0} and b_{1}.

b. Interpret the meaning of the Y intercept, b_{0}, and the slope, b_{1}, in this problem.

c. Use the prediction line developed in (a) to predict the mean taxes for a house whose assessed value is $ 400,000.

d. Determine the coefficient of determination, r^{2}, and interpret its meaning in this problem.

e. Perform a residual analysis on your results and evaluate the regression assumptions.

f. At the 0.05 level of significance, is there evidence of a linear relationship between taxes and assessed value?

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**Related Book For**

## Business Statistics A First Course

7th Edition

**Authors:** David M. Levine, Kathryn A. Szabat, David F. Stephan

**ISBN:** 9780321979018