Question

A sample of 12 homes sold last week in Middlesex county New Jersey is selected. Can we conclude that the size of the home (Reported in the chart below) increases, as the selling price also increases? Home Size 1,400 1,300 1,200 1,100 1,400 1,000 1,300 800 1,200 900 1,100 1,100 Selling Price $100,000.00 $110,000.00 $105,000.00 $120,000.00 $80,000.00 $105,000.00 $110,000.00 $85,000.00 $105,000.00 $75,000.00 $70,000.00 $95,000.00 Copy above table into excel and compute the following.... a) Insert a Scatter Plot diagram indicating the 4 quadrants (4 quadrants are Optional) b) Compute the Covariance c) Compute the coefficient of correlation d) Calculate the slope e) Calculate the y intercept f) Write the general form of the linear regression equation inserting the calculations for "D" and "E". g) Based on your regression equation what will be the price of a 1,500 sqft house?

Answer 1

b) covariance is 833333.3333

c) Coefficient of correlation is 0.307222 = 0.3072

d) Slope is 25.64

e) intercept is 67179.49

f) linear regression equation is

Yhat = 67179.49 + 25.64(X)

Where x is home size.

g)

Yhat = 67179.49 + 25.64(1500)

Yhat =105,639.49

The price is $105,639.49

a)