Linear Regression and Correlation for Homes in Minnesota
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A sample of 12 homes sold last week in St. Paul, Minnesota, selected. Can we conclude that, as the size of the home (reported below in thousands of square feet) increase, the selling price (reported in thousands) also increases?
Home size Selling price
1.4 100
1.3 110
1.2 105
1.1 120
1.4 80
1.0 105
1.3 110
0.8 85
1.2 105
0.9 75
1.1 70
1.1 95
a. Compute the coefficient of correlation.
b. Determine the coefficient of determination
c. Can we conclude that there is a positive association between the size of the home and the selling price? Use the 0.5 significance level.
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Solution Summary
The solution uses linear regression and correlation to analyze the 12 homes sold last week in St. Paul, Minnesota. The expert concludes where there is a positive association between the size of the home and the selling price with a 0.5 significance level.
Solution Preview
a. Compute the coefficient of correlation.
The correlation coefficient is calculated by formula
where is an average of x and y.
Using Megastat
Add-in Megastat correlation.
Correlation Matrix
home size selling price
home size 1.000
selling price ...
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