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.

Attachments

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.