Question

Estimate: Price = β₀ + β₁Sqft + β₂Beds + β₂Baths + ε, where Price, Sqft, Beds, and Baths refer to home price, square footage, number of bedrooms, and number of bathrooms, respectively.

Price,Sqft,Beds,Baths,Col
840000,2768,4,3.5,1
822000,2500,4,2.5,1
713000,2400,3,3,1
689000,2200,3,2.5,1
685000,2716,3,3.5,1
645000,2524,3,2,1
625000,2732,4,2.5,0
620000,2436,4,3.5,1
587500,2100,3,1.5,1
585000,1947,3,1.5,1
583000,2224,3,2.5,1
569000,3262,4,2,0
546000,1792,3,2,0
540000,1488,3,1.5,0
537000,2907,3,2.5,0
516000,1951,4,2,1
511000,1752,3,1.5,1
510000,1727,3,2,1
495000,1692,3,2,0
463000,1714,3,2,0
457000,1650,3,2,0
451000,1685,3,2,0
435000,1500,3,1.5,1
431700,1896,2,1.5,0
414000,1182,2,1.5,0
401500,1152,3,1,0
399000,1383,4,1,0
380000,1344,4,2,0
380000,1272,3,1,0
375900,2275,5,1,0
372000,1005,2,1,0
367500,1272,3,1,0
356500,1431,2,2,1
330000,1362,3,1,0
330000,1465,3,1,0
307500,850,1,1,0

a. Use R’s predict() function to construct the 95% confidence interval for the expected price of a 2,500-square-foot home in Arlington, Massachusetts, with three bedrooms and two bathrooms. (Round answers to 2 decimal places.)

b. Use R’s predict() function to construct the corresponding prediction interval for an individual home. (Round answers to 2 decimal places.)

Answer 1

a) from the above excel sheet data

95% confidence interval is

528486.5 and 628922.7thr

when square feet is 2500 with 3 bedrooms and 2 bathrooms.

b) for prediction interval

predict(model,data.frame(Squarefeet = 2500, Beds = 3, Baths = 2), (interval=prediction)

95% prediction interval is

417921.6 and 739487.7