Question
Say you want to build houses with the intention of selling them. You need to decide how many bathrooms your houses should have. The marginal
Say you want to build houses with the intention of selling them. You need to decide how many bathrooms your houses should have. The marginal cost of building an additional full-bathroom is given by the following progression: (1) $5,000, (2) $10,000, (3) $17,000 and (4) $30,0000. That is, if you plan to build a house with a single bathroom; that will add $5,000 to the total construction cost; but, if you build two bathrooms the total cost in bathrooms would be $15,000 (5000 + 10000), and so on. 1. Use a univariate model to estimate the average change in selling price for each additional full-bathroom. What is the optimal number of full-bathrooms taking into consideration the cost? 2. Identify which variables in the dataset are simultaneously associated with the price of the property and the number of full-bathrooms. 3. Repeat question 1 using a multivariate regression model, controlling for the variables you identified in question 2. 4. Present your regression results in a single table, with each model side by side.
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