Question

write the general form and the prediction equation of a first order model for price using average school rating in the area and crime rate per 100,000 people as predictors. include the interaction term between average school rating and crime rate.

Answer 1

The general form of the first-order model for predicting price using average school rating, crime rate, and their interaction term is written with coefficients representing each variable and an error term. The prediction equation is similar but excludes the error term.

Step-by-step explanation:

To write the general form and the prediction equation of a first order model for price using average school rating and crime rate per 100,000 people as predictors, including the interaction term between the two, we use the following format:

General Form:

Price = β0 + β1(Average School Rating) + β2(Crime Rate) + β3(Average School Rating × Crime Rate) + ε

where:

• β0 represents the intercept,
• β1 represents the coefficient for the Average School Rating,
• β2 represents the coefficient for the Crime Rate,
• β3 represents the coefficient for the interaction between Average School Rating and Crime Rate,
• ε is the error term representing the variation in Price not explained by the model.

Prediction Equation:

Ž = β0 + β1(Average School Rating) + β2(Crime Rate) + β3(Average School Rating × Crime Rate)

The prediction equation is used to estimate the expected price based on the values of the predictors.