Question

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

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