10.14 Assessment value versus sales price, continued.
Refer to the previous exercise. Let’s consider linear regression analysis using just 34 properties.
hsales
Obtain the residuals and plot them versus assessed value. Is there anything unusual to report? If so, explain.
Do the residuals appear to be approximately Normal? Describe how you assessed this.
Based on your answers to parts (a) and (b), do you think the assumptions for statistical inference are reasonably satisfied? Explain your answer.
Construct a 95% confidence interval for the slope and summarize the results.
Using the result from part (d), compare the estimated regression line with , which says that, on average, the selling price is equal to the assessed value. Is there evidence that this model is not reasonable? In other words, is the selling price typically larger or smaller than the assessed value? Explain your answer.