# Estimated Regression Equation

The typical household income and typical home price for a sample of 18 cities follows (see attachment - data are in thousands of dollars).

PART A:
a. Use these data to develop an estimated regression equation that could be used to estimate the typical home price for a city given the typical household income.
b. Compute r2 [r squared]. Would you feel comfortable using this estimated regression equation to estimate the typical home price for a city?
c. Estimate the typical home price for a city that has a typical household income of \$95,000.00.

PART B:
Refer to the above exercise, where an estimated regression equation was developed relating typical household income and typical home price. Test whether the typical household income for a city and the typical home price are related at the .01 level of significance.

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Solution Summary

The typical household income and typical home price for a sample of 18 cities follows (see attachment - data are in thousands of dollars).

PART A:
a. Use these data to develop an estimated regression equation that could be used to estimate the typical home price for a city given the typical household income.
b. Compute r2 [r squared]. Would you feel comfortable using this estimated regression equation to estimate the typical home price for a city?
c. Estimate the typical home price for a city that has a typical household income of \$95,000.00.

PART B:
Refer to the above exercise, where an estimated regression equation was developed relating typical household income and typical home price. Test whether the typical household income for a city and the typical home price are related at the .01 level of significance.

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Changping Wang, MA

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Active since 2003

BSc , Wuhan Univ. China
MA, Shandong Univ.

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