Question

QUESTION 7 Data were collected from a random sample of 220 home sales from a community in 2013. Let Price denote the selling price (in $1000s). BDR denote the number of bedrooms, Bath denote the number of bathrooms. Hsize denote the size of the house in square feet), Lsize denote the lot size (in square feet). Age denote the age of the house in years), and Poor denote a binary variable that is equal to 1 if the condition of the house is reported as "poor." An estimated regression yields Price = 119.2 +0.485BDR + 23.4Bath +0.156Hsize + 0.002 Lsize + 0.090 Age - 48.8 Poor, R = 0.72, SER = 41.5. Suppose a homeowner converts part of an existing family room in her house into a new bathroom. What is the expected increase in the value of the house? 0.485 23.4 0.156 0.002

Answer 1

Correct Answer:

B

Explanation:

As per the given regression equation, with 1 unit increase in bath room, the price increases by 23.4. So, when a part of room is transformed into the bathroom and number of bathrooms increases by 1 more unit, then price increases by 23.4.