Question

Suppose that in a certain neighborhood, the cost of a home (in thousands) is proportional to the size of the home in square feet. The regression equation quantifying this relationship is found to be (price) = 0.03*(size) + 35.06. You look more closely at one of the houses selected. The house is listed as having 2443 square feet and is listed at a price of $110.89 (thousand). What is the residual?

Question 4 options:

	1) 2334.65
	2) 2332.11
	3) -2332.11
	4) -2.54
	5) 2.54

Answer 1

(price) = 0.03*(size) + 35.06

size = 2443

(price) = 0.03*(2443) + 35.06 = 108.35

residual = observed - predicted
= 110.89 - 108.35
= 2.54

Ans: Option 5