Derek is studying the relation between the selling price of a house (in dollars) (Y) and the age of the house (in years) (X). It is shown that r_X_Y = - 0.2, $\bar{X}$ = 40, $\bar{Y}$ = 460,000. If Derek's own house was constructed 50 years ago, then the predicted selling price of his house based on simple linear regression would be A) more than 460,000 dollars. B) less than 460,000 dollars. C) exactly 460,000 dollars. D) impossible to be determined based on the information given.

Question

Quizplus · Accepted Answer

The correlation coefficient (r) between the age of the house (X) and the selling price (Y) is -0.2, indicating a negative relationship. This means as the age of the house increases, the selling price tends to decrease. Since Derek's house, at 50 years, is older than the average age of houses in the study ($\bar{X}$ = 40 years), the predicted selling price of his house would be less than the average selling price ($\bar{Y}$ = 460,000 dollars).

Derek Is Studying the Relation Between the Selling Price of a House