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# Regression Analysis: Interpretation of regression equation

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Suppose the regression equation that has been used to estimate the value of existing homes is as follows;

Value = 10,000 + 50X1 + 5X2 + 10,000X3

Where;

X1 is square feet of livable area

X2 is the size of the lot measured in square feet

X3 is an indicator variable for the presence of a pool (1 if yes, 0 if no)

a. Interpret the meaning of the slopes of this equation.
b. Estimate the value of a home with 2,000 square feet of livable area, 10,000 square foot lot, and a pool.

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#### Solution Preview

a. Interpret the meaning of the slopes of this equation.
Value of the home increases by
50 for every square feet increase in ...

#### Solution Summary

The solution interprets a regression equation. It interpret the meaning of the slopes of the equation and using the equation estimates the value of a home.

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