Question

The following data on sale price, size, and land-to-building ratio for 10 large industrial properties appeared...

The following data on sale price, size, and land-to-building ratio for 10 large industrial properties appeared in a paper.

Property Sale Price
(millions
of dollars)
Size
(thousands
of sq. ft.)
Land-to-
Building
Ratio
1 10.5 2166 1.9
2   2.5   752 3.6
3 30.4 2422 3.7
4   1.7   223 4.8
5 20.0 3917 1.6
6   8.1 2867 2.3
7 10.1 1698 3.1
8   6.7 1046 4.7
9   5.8 1109 7.5
10   4.6   405 17.1  

(a) Calculate the value of the correlation coefficient between sale price and size. (Give the answer to three decimal places.)
r =  

(b) Calculate the value of the correlation coefficient between sale price and land-to-building ratio. (Give the answer to three decimal places.)
r =  
(c) If you wanted to predict sale price and you could use either size or land-to-building ratio as the basis for making predictions, which would you use?

Size

Land-to-building ratio


(d) Based on your choice in Part (c), find the equation of the least-squares regression line you would use for predicting y = sale price. (Give answers to three decimal places.)
= ... + ... x

Homework Answers

Answer #1

a)

from excel: correl function:

r=correl(sale array, size array) =0.702

b)

r=correl(sale array, land to building array) =-0.329

c)

since absolute value of correlation is higher for size

one should use size

d)

y=718.665+93.808x

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