In 2011, home prices and mortgage rates dropped so low that in a number of cities the monthly cost of owning a home was less than renting. The following data show the average asking rent for 10 markets and the monthly mortgage on the median-priced home (including taxes and insurance) for 10 cities where the average monthly mortgage payment was less than the average asking rent (The Wall Street Journal, November 26€“27, 2011).

a. Develop the estimated regression equation that can be used to predict the monthly mortgage given the average asking rent.
b. Construct a residual plot against the independent variable
c. Do the assumptions about the error term and model form seem reasonable in light of the residualplot?

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Mortgage (S) 539 1002 626 Rent (S) City Atlanta Chicago Detroit Jacksonville, Fla. Las Vegas Miami Minneapolis Orlando, Fla. Phoenix St. Louis 840 1062 823 779 796 1071 953 851 762 723 655 977 776 695 651 654