In 2011 home prices and mortgage rates dropped so low that in anumber of cities the monthly cost of owning a home was lessexpensive than renting. The following data show the average askingrent for 10 markets and the monthly mortgage on the median pricedhome (including taxes and insurance) for 10 cities where theaverage monthly mortgage payment was less than the average askingrent (The Wall Street Journal, November 26–27, 2011).
| City | Rent ($) | Mortgage ($) |
| Atlanta | 840 | 539 |
| Chicago | 1062 | 1002 |
| Detroit | 823 | 626 |
| Jacksonville, Fla. | 779 | 711 |
| LasVegas | 796 | 655 |
| Miami | 1071 | 977 |
| Minneapolis | 953 | 776 |
| Orlando,Fla. | 851 | 695 |
| Phoenix | 762 | 651 |
| St.Louis | 723 | 654 |
Enter negative values as negative numbers. a. Develop the estimated regression equationthat can be used to predict the monthly mortgage given the averageasking rent (to 2 decimals).
The regression equation is:
Mortgage ($) =Â Â +Â Â Rent ($) b. Choose a residual plot against theindependent variable.
SelectScatter diagram 1Scatter diagram 2Scatter diagram 3None ofthese choicesItem 3 c. Do the assumptions about the error term andmodel form seem reasonable in light of the residual plot?
SelectRelationship is significant and should assume a linearrelationship, due to residual plot.Relationship is significant butshouldn't assume a linear relationship, due to residualplot.Relationship is not significant and should assume a linearrelationship, due to residual plot.Relationship is not significantand shouldn't assume a linear relationship.Item 4 |
Enter negative values as negative numbers. a. Develop the estimated regression equationthat can be used to predict the monthly mortgage given the averageasking rent (to 2 decimals).
The regression equation is:
Mortgage ($) =Â Â +Â Â Rent ($) b. Choose a residual plot against theindependent variable.
SelectScatter diagram 1Scatter diagram 2Scatter diagram 3None ofthese choicesItem 3 c. Do the assumptions about the error term andmodel form seem reasonable in light of the residual plot?
SelectRelationship is significant and should assume a linearrelationship, due to residual plot.Relationship is significant butshouldn't assume a linear relationship, due to residualplot.Relationship is not significant and should assume a linearrelationship, due to residual plot.Relationship is not significantand shouldn't assume a linear relationship.Item 4 |
