For problem 14.72 assume that the first seven homes are inNorfolk and the next eight are in Virginia Beach. After adding thisvariable by hand to the model as a dummy variable: 1 for Norfolkand 0 for VA Bch.
1. Assess multicollinearity for the model.
2. Interpret the coefficient for the dummy variable.
3. Determine the significance of the dummy variable to themodel.
House
Assessed Value ($000)
Size of House (Thousands of Square Feet)
Age (Years)
1 184.4 2.00 3.42
2 177.4 1.71 11.50
3 175.7 1.45 8.33
4 185.9 1.76 0.00
5 179.1 1.93 7.42
6 170.4 1.20 32.00
7 175.8 1.55 16.00
8 185.9 1.93 2.00
9 178.5 1.59 1.75
10 179.2 1.50 2.75
11 186.7 1.90 0.00
12 179.3 1.39 0.00
13 174.5 1.54 12.58
14 183.8 1.89 2.75
15 176.8 1.59 7.17
