1.

 An agent for a residential real estate company in a large city would like to be able to predict the
monthly rental cost for apartments, based on the size of an apartment, as defined by square footage.
The agent selects a sample of 25 apartments in a particular residential neighborhood and gathers the
following data

a. Construct a scatter plot.

 2500

2000
RENT

1500

1000

500

0
600 800 1000 1200 1400 1600 1800 2000 2200 2400

SIZE (SQUARE FEET)

b. Use the least-squares method to determine the regression coefficients b0 and b1

Size – Square Feet (X) Rent (Y) X2 Y2 XY

1
850.00 950.00 722,500.00 902,500.00 807,500.00
2
1,450.00 1,600.00 2,102,500.00 2,560,000.00 2,320,000.00
3
1,085.00 1,200.00 1,177,225.00 1,440,000.00 1,302,000.00
4
1,232.00 1,500.00 1,517,824.00 2,250,000.00 1,848,000.00
5
718.00 950.00 515,524.00 902,500.00 682,100.00
6
1,485.00 1,700.00 2,205,225.00 2,890,000.00 2,524,500.00
7
1,136.00 1,650.00 1,290,496.00 2,722,500.00 1,874,400.00
8
726.00 935.00 527,076.00 874,225.00 678,810.00
9
700.00 875.00 490,000.00 765,625.00 612,500.00
10
956.00 1,150.00 913,936.00 1,322,500.00 1,099,400.00
11
1,100.00 1,400.00 1,210,000.00 1,960,000.00 1,540,000.00
12
1,285.00 1,650.00 1,651,225.00 2,722,500.00 2,120,250.00
13
1,985.00 2,300.00 3,940,225.00 2,722,500.00 4,565,500.00
14
1,369.00 1,800.00 1,874,161.00 3,240,000.00 2,464,200.00
15 1,400.00 1,380,625.00 1,960,000.00 1,645,000.00
 1,175.00
16
1,225.00 1,450.00 1,500,625.00 2,102,500.00 1,776,250.00
17
1,245.00 1,100.00 1,550,025.00 1,210,000.00 1,369,500.00
18
1,259.00 1,700.00 1,585,081.00 2,890,000.00 2,140,300.00
19
1,150.00 1,200.00 1,322,500.00 1,440,000.00 1,380,000.00
20
896.00 1,150.00 802,816.00 1,322,500.00 1,030,400.00
21
1,361.00 1,600.00 1,852,321.00 2,560,000.00 2,177,600.00
22
1,040.00 1,650.00 1,081,600.00 2,722,500.00 1,716,000.00
23
755.00 1,200.00 1,200.00 1,440,000.00 906,000.00
24
1,000.00 800.00 1,000,000.00 1,000,000.00 800,000.00
25
1,200.00 1,750.00 1,440,000.00 3,062,500.00 2,100,000.00
TOTALS
28,383.00 2,100,000.00 34,223,535.00 51,192,350.00 41,480,210.00
SSXY =41,480,210.00 -((28,383.00*34,660.00)/25) 2,130,018.8000
SSX =51,192,350.00 -(28,383.00^2)/25 1,999,747.4400
𝐵1 =2,130,018.8000/1,999,747.4400 1.0651
𝑋̅ =28,383.00/25 1,135.3200
𝑌̅ =34,660.00/25 1,386.4000
𝐵0 =1,386.4000-1.0651*1,135.3200 177.1208

𝒀̂ = 177.1208 + 1.0651(X)

c. Interpret the meaning of and in this problem.

The possible rent for an apartment of 0 square feet is 177.1208 (B 0). This, however, cannot
be done because there is no apartment with 0 square feet. Although, for every unit of increase in square
foot, the anticipated increase in rent is 1.0651 (B 1).

d. Predict the monthly rent for an apartment that has 1,000 square feet.

𝑌̂ = 177.1208 + 1.0651(X)
= 177.1208 + 1.0651(1,000)
= 177.1208 + 1,065.1
= 1,242.22

2. A company that holds the DVD distribution rights to movies previously released only in theaters wants
to estimate sales revenue of DVDs based on box office success. The box office gross (in Php millions) for
each of 22 movies in the year that they were released and the DVD revenue (in Php millions) in the
following year are shown below and stored in.

a. constructs a scatter plot.

120

100

80
DVD REV-

60
ENUE

40

20

0
0 20 40 60 80 100 120 140 160 180 200

BOX OFFICE GROSS

b. assuming a linear relationship, use the least-squares method to determine the regression coefficients b0 and b1
Movie Box Office DVD X2 Y2 XY
Gross (X) Revenue(Y)
 Bolt 109.92 81.60 12,082.41 6,658.56 8,969.47
Madagascar Escape 2
Africa 177.02 107.54 31,336.08 11,564.85 19,036.73
Quantum of Solace
166.82 44.41 27,828.91 1,972.25 7,408.48
Beverly Hills
Chihuahua 93.78 60.21 8,794.69 3,625.24 5,646.49
Marley and Me
106.66 62.82 11,376.36 3,946.35 6,700.38
High School Musical
3 Senior Year 90.22 58.81 8,139.65 3,458.62 5,305.84
Bedtime Stories
85.54 48.79 7,317.09 2,380.46 4,173.50
Role Models
66.70 38.78 4,448.89 1,503.89 2,586.63
Pineapple Express
87.34 44.67 7,628.28 1,995.41 3,901.48
Eagle Eye
101.40 34.88 10,281.96 1,216.61 3,536.83
Fireproof
33.26 31.05 1,106.23 964.10 1,032.72
Momma Mia!
144.13 33.14 20,773.46 1,098.26 4,776.47
Seven Pounds
60.15 27.12 3,618.02 735.49 1,631.27
Australia
46.69 28.16 2,179.96 792.99 1,314.79
Valkyrie
60.73 26.43 3,688.13 698.54 1,605.09
Saw V
56.75 26.10 3,220.56 681.21 1,481.18
The Curious Case of
Benjamin Button 79.30 42.04 6,288.49 1,767.36 3,333.77
Max Payne
40.68 25.03 1,654.86 626.50 1,018.22
Body of Lies
39.32 21.45 1,546.06 460.10 843.41
Nights in Rodanthe
41.80 17.51 1,747.24 306.60 731.92
Lakeview Terrace
39.26 21.08 1,541.35 444.37 827.60
The Spirit
17.74 18.78 314.71 352.69 333.16
TOTALS
1,745.21 1,745.21 176,913.38 47,250.47 86,195.43
SSXY =86,195.43-((1,745.21*900.40)/22) 14,768.7399
SSX =176,913.38-(1,745.21^2)/22 38,469.8344
𝐵1 =14,768.7399/38,469.8344 0.3839
𝑋̅ =1,745.21/22 79.3277
𝑌̅ =900.40/22 40.9273
𝐵0 =40.9273-0.3839*79.3277 10.4730

𝒀̂ = 10.4730 + 0.3839(X)

c. Interpret the meaning of the slope, in this problem.

The theoretical DVD sales revenue received by the firm is 10.4730 (B0), assuming no box office
success, and the anticipated DVD sales revenue is 0.3839 (B1) with every rise in box office income.

d. Predict the sales revenue for a movie DVD that had a box office gross of Php75 million.

𝑌̂ = 10.4730 + 0.3839(X)
= 10.4730 + 0.3839(75,000,000)
= 10.4730 + 28,792,500
= ₱28,792,510.47