Reference no: EM132362834

Home # Zestimate Sale Price

1

139990 139000

2 747900 740000

3 547500 570000

4 550000 550000

5 290000 290000

6 485267 480000

7 640000 640000

8 250000 250000

9 485267 480000

10 320000 320000

11 455000 450000

12 511000 510000

13 610000 600000

14 268000 265000

15 275000 270000

a. Draw a scatter diagram of the data from part (a), treating the Zestimate as the explanatory variable. Comment on the association between the Zestimate and selling price.

b. Find the least-squares regression line, treating the Zestimate as the explanatory variable.

c. Interpret the slope of the least-squares regression line in a sentence.

d. Draw a residual plot to verify a linear model is appropriate. Include your plot here and explain your answer.

e. Draw a boxplot or histogram of the residuals. Are there any outliers? Include your plot here and explain your answer.

f. Assuming the residuals are normally distributed, test whether a linear relation exists between the Zestimate and selling price. Use the α=0.05 level of significance. Use the steps of the hypothesis test as outlined in the book. (You have already checked the conditions.)

g. Choose a Zestimate price that is not outside the scope of your model. Use the regression model from part (c) to predict the mean sale price of all homes with the Zestimate price you selected.

h. Why did you need to choose a Zestimate price that is not outside the scope of your model?

i. Construct a 95% confidence interval for the mean sale price of all homes whose Zestimate is equal to the value chosen in part (h).

j. Construct a 95% prediction interval for the sale price of a particular home whose Zestimate is equal to the value chosen in part (h).

k. Explain why the predicted sale price found in parts (j) and (k) are the same, yet the intervals are different.

1. Share your answers to parts (c) and (g). Are you surprised at your results? Not surprised? Explain.