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Regression, Correlation, Point Estimate

[Data attached]

An agent for a residential real estate company in a large city would like to be able to predict the monthly rental cost of apartments based on the size of the apartment. Data for a sample of 25 apartments in a particular neighborhood are provided in the attached excel spreadsheet.

1. At the .05 level of significance determine if the correlation between rental cost and apartment size is significant.

A. No, there is not a statistically significant linear relationship between monthly rental cost and apartment size, because the sample correlation coefficient is less than .95.
B. Yes, there is a statistically significant linear relationship between monthly rental cost and apartment size, because the p-value for this test is less than .0001.
C. Yes, there is a statistically significant linear relationship between monthly rental cost and apartment size, because the t-test value, 7.74, is greater than the critical value 1.96.
D. Yes, there is a statistically significant linear relationship between monthly rental cost and apartment size, because the sample correlation coefficient 0.85 exceeds 0.50.

2. Given the same data referenced in the problem above, find the estimated regression equation which can be used to estimate the monthly rent for apartments in this neighborhood using size as the predictor variable.

A. y=177.12+0.8500 (size)
B. y=1.065+177.12 (size)
C. y=197.12+2.065 (size)
D. y=177.12+1.065 (size)

3. Given the same data referenced in the problems above, find a point estimate for the average monthly rent for apartments having 1,000 square feet of space.

Attachments

Solution Summary

A complete, neat and step-by-step solution using ANOVA to determine if there is a significant correlation is provided in the attached Excel file.

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