Answer:
The correct option is;
E) For each hundred-thousand dollar increase in the listing price, the sales price is predicted to increase by $101,000
Explanation:
Whereby the relationship between the actual price of a strip mall and the listing price is modeled according to the least squares regression line as follows;
C = 0.2 + 1.01·L
Where;
L = The listing price
C = The sales price
Where both amounts are in hundred-thousands of dollars;
Therefore, given that the slope is 1.01, we have that for an increase of $100,000 for the listing price, L, which is 1 unit increase the sale price increases as follows
C₁ = 0.2 + 1.01 × 1 = 1.21
While for an increase of an extra $100,000, to make the listing price. $200,000 or 2 units, we have;
C₂ = 0.2 + 1.01 × 2 = 2.22
The increase is C₂ - C₁ = 2.22 - 1.21 = 1.01
C₂ - C₁ = $100,000 × 1.01 = $101,000
The increase is C = $101,000
Whereby, the equation is a linear regression line which is a model for prediction, we have;
The predicted increase in the sale price is $101,000 for each $100,000 increase in the listing price.