We will work with the data for homes for sale in Lafayette and West Lafayette, Indiana. The response (dependent) variable is Price, the asking price of a home. The data set contains the following explanatory (independent) variables:
- SqFt, the number of square feet for the home
- Bedrooms, the number of bedrooms
- Baths, the number of bathrooms
- Garage, the number of cars that can fit in the garage
- The data set contains 44 homes for sale in zip code 47904. a few homes have prices that are somewhat high relative to the others. Similarly, some values for SqFt are relatively high. Exclude any home with Price greater than $150,000 and any home with SqFt greater than 1800 ft2. After excluding process, how many houses do you have in the data set? (20 p)
- Regress price (dependent variable) on square feet (independent variable) and write the regression equation. (18 p) a. What proportion of the variance in Price variable can be explained by the Square Feet variable? b. Is this proportion of variance statistically significant at .05 level of significance? Justify your answer. c. Does Square feet significantly predict the price of the house? Justify your answer.
- Recode the “Bedrooms” categorical variable to be Bed3 = 1 if the home has three or more bedrooms and Bed3 = 0 if it does not. Bed3 is called as Dummy variable (indicator variable). (36 p)
- Run the regression analysis including the variables of price and the dummy variable, Bed3 and write the regression equation.
- What proportion of variance in the price of the house can be explained by the number of bedrooms of the house? Is this proportion of variance statistically significant at .05 level of significance? Justify your answer.
- Does number of bedrooms significantly predict the price of the house? Justify your answer.
- What is the predicted price for homes with two or fewer bedrooms (Bed3 = 0)? What is the predicted price for homes with three or more bedrooms (Bed3 =1)
There are 3 more questions. Bringing it to a total of 6
Follow directions on assignment and display the work.
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