Practical Management Science
6th Edition
ISBN: 9781337406659
Author: WINSTON, Wayne L.
Publisher: Cengage,
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Rhonda Clark, a Slippery Rock, Pennsylvania, real
estate developer, has devised a regression model to help determine
residential housing prices in northwestern Pennsylvania. The
model was developed using recent sales in a particular neighbor-
hood. The price ( Y ) of the house is based on the size (square foot-
age 5 X ) of the house. The model is:
Y = 13,473 + 37.65X
The coefficient of correlation for the model is 0.63.
a) Use the model to predict the selling price of a house that is
1,860 square feet.
b) An 1,860-square-foot house recently sold for $95,000. Explain
why this is not what the model predicted.
c) If you were going to use multiple regression to develop such a
model, what other quantitative variables might you include?
d) What is the value of the coefficient of determination in this
problem?
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