Suppose you're running a multiple regression of Home Prices (in thousands of $) on five different treatment variables including number of bedrooms, number of bathrooms, total square feet, total lot size, and garage size, where all the treatment variables have been standardized . If the coefficient on number of bedrooms is estimated to be 3, how would you interpret the coefficient on the number of bedrooms?
A) Increasing the number of bedrooms by 1, holding number of bathrooms, total square feet, lot and garage size fixed increases the average home price by three thousand dollars.
B) Increasing the number of bedrooms by 3, holding number of bathrooms, total square feet, lot and garage size fixed increases the average home price by a thousand dollars.
C) Increasing the number of bedrooms by 1, increases the average home price by three thousand dollars.
D) Increasing the number of bedrooms by 1 standard deviation, holding number of bathrooms, total square feet, lot and garage size fixed increases the average home price by three thousand dollars.

Question

Quizplus · Accepted Answer

Since the variables have been standardized, a 1 unit increase in the number of bedrooms actually refers to a 1 standard deviation increase in the number of bedrooms, not just adding one more bedroom. This means the interpretation should account for the change in terms of standard deviations.

Suppose You're Running a Multiple Regression of Home Prices (In