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21 July, 12:00

A regression line for predicting the selling prices of homes in Chicago is y^ = 168 + 102x, where x is the square footage of the house. Interpret the residual for a house with 1800 square feet that recently sold for $200,000

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  1. 21 July, 12:28
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    the house was sold for 16,232 more than the expected based on the regression line

    Explanation:

    First, we determine know that the regression line for prediction of selling prices of homes in Chicago

    y^ = 168 + 102x

    No we extract the information required for the question as follows

    1) The house has a square feet of 1800

    2) The house was recently sold for $200,000

    Therefore, based on the information and the predicting regression line

    y^ = 168 + 102x

    = y^ = 168 + 102 (1800)

    y^ = 168 + $183,600

    y^ = 183,768

    Since observed value for 1800 square foot is y=$200,000

    Residual is = 183,768 - 200,000

    =-16,232

    the house was sold for 16,232 more than the expected based on the regression line
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