10.00 points Exercise 17-21 Algo House price y is estimated as a function of the

Question

10.00 points Exercise 17-21 Algo House price y is estimated as a function of the square footage of a house x, a dummy variable d that equals 1 if the house has ocean views and 0 otherwise; and a product of this dummy and the square footage xd. The estimated house price, measured in $1,000s, is given by -710.13x + 49d+ 0.05xd. a. Compute the predicted price of a house with ocean views and square footage of 1,500 and 2,500, respectively. (Round your final answers to the nearest whole number.) Square Footage 1,500 2,500 thousand thousand b. Compute the predicted price of a house without ocean views and square footage of 1,500 and 2,500, respectively. (Round your final answers to the nearest whole number.) Square Footage 1,500 2,500 thousand thousand

Explanation / Answer

a) Predicted for 1500 Square foortage = 71+0.13*1500+49*1+0.05*1500*1 = 390

Predicted for 2500 Square foortage = 71+0.13*2500+49*1+0.05*2500*1 = 570

b) Predicted for 1500 Square foortage = 71+0.13*1500+49*0+0.05*1500*0 = 266

Predicted for 2500 Square foortage = 71+0.13*2500+49*0+0.05*2500*0 = 396

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