Reference no: EM133169192

A Realtor in Arlington, Massachusetts, is analyzing the relationship between the sale price of a home (Price in $), its square footage (Sqft), the number of bedrooms (Beds), the number of bathrooms (Baths), and a Colonial dummy variable (Colonial equals 1 if a colonial-style home, 0 otherwise). She collects data on 36 sales in Arlington for the analysis. A portion of the data is shown in the accompanying table.

a. Estimate the model Price = β₀ + β₁Sqft + β₂Beds + β₃Baths + β₄Colonial + ε. (Negative values should be indicated by a minus sign. Round Coefficients to 2 decimal places.)

b-1. Interpret the coefficient of beds.

Multiple choice 1

• For each additional bedroom in a house, the average price of a house is expected to decrease by $17,798, all else constant.
• For each additional bedroom in a house, the average price of a house is expected to increase by $17,798, all else constant.
• As the price of a house decreases by $17,798, the house is expected to have one more bedroom, all else constant.
• As the price of a house decreases by $17,798, the house is expected to have one less bedroom, all else constant.

b-2. Interpret the coefficient of colonial.

Multiple choice 2

• All else constant, the price of a colonial-style house is, on average, $57,109 more than a non-Colonial style.
• All else constant, the price of a colonial-style house is, on average, $57,109 less than a non-Colonial style.
• All else constant, the price of a colonial-style house is, on average, $183,859 more than a non-Colonial style.
• All else constant, the price of a colonial-style house is, on average, $183,859 less than a non-Colonial style house.

c. Predict the price of a 2,500 square-foot, colonial-style home with three bedrooms and two bathrooms. (Do not round intermediate calculations. Round final answer to the nearest whole number.)