Question

The data show the list and selling prices for several expensive homes. Find the regression​ equation, letting the first variable be the independent​ (x) variable. Find the best predicted selling price of a home having a list price of ​$ million. Use a significance level of 0.05.

Answer 1

The best predicted selling price of a home having a list price of ​$22 million is $20.52 million.

Explanation:

The missing data is:

List price (x) (millions of $)

(1) 1.6 (2) 4.2 (3) 2.1 (4) 1.6 (5) 2.3 (6) 4

Selling price (y) (millions of $)

(1) 2 (2) 4.6 (3) 1.8 (4) 1.9 (5) 2.4 (6) 3.6

Use Excel to perform the regression analysis.

The significance level is, α = 0.05.

The regression output is attached below.

The regression equation is:

`\hat y=0.28+0.92x`

The value of t-statistic is:

t = 0.676.

The p-value is:

p-value = 0.536

Compute the predicted selling price of a home having a list price of ​$22 million as follows:

`\hat y=0.28+0.92x`

`=0.28+0.92* 22\\\\=0.28+20.24\\\\=20.52\ \text{million}`

Thus, the best predicted selling price of a home having a list price of ​$22 million is $20.52 million.