Question

1. Below is some of the regression output from a regression of the amount rental houses on an island rent for (expressed in thousands of $'s) based on the size of the house (expressed in square feet), whether the house has an ocean front view (VIEW = 1 if it has an ocean front view and = 0 if not), and an interaction term between the ocean front view dummy variable and the size of the house. If the estimated equation is:

  
Price = 1,099 + 0.38*Size + 1,558*View + 0.08*(Size*View)

  
Suppose you just built a house with an ocean front view that is 3100 square feet and you want to decide how much to rent it for. What is the predicted price of a house that is 3100 square feet and has an ocean front view? (please express your answer using 1 decimal places)

2.Below is some of the regression output from a regression of the amount rental houses on an island rent for (expressed in thousands of $'s) based on the size of the house (expressed in square feet), whether the house has an ocean front view (VIEW = 1 if it has an ocean front view and = 0 if not), and an interaction term between the ocean front view dummy variable and the size of the house. If the estimated equation is

  
Price = 1,444 + 0.3*Size + 1,411*View + 0.08*(Size*View)

  
How much more (or less) does a 3800 square foot house that has an ocean front view rent for compared to a similar sized house without an ocean front view? (if the ocean front house rents for more then express your answer as a POSITIVE number; if the ocean front house rents for less then express your answer as a NEGATIVE number) (please express your answer using 1 decimal places)

Answer 1

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