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In 2011 home prices and mortgage rates dropped so low that in anumber of cities the monthly cost of owning a home was lessexpensive than renting. The following data show the average askingrent for 10 markets and the monthly mortgage on the median pricedhome (including taxes and insurance) for 10 cities where theaverage monthly mortgage payment was less than the average askingrent (The Wall Street Journal, November 26–27, 2011).Click on the webfile logo to reference the data.

City	Rent ($)	Mortgage ($)
Atlanta	840	539
Chicago	1062	1002
Detroit	823	626
Jacksonville, Fla.	779	711
LasVegas	796	655
Miami	1071	977
Minneapolis	953	776
Orlando,Fla.	851	695
Phoenix	762	651
St.Louis	723	654

Enter negative values as negative numbers. a. Develop the estimated regression equationthat can be used to predict the monthly mortgage given the averageasking rent (to 2 decimals). The regression equation is: Mortgage ($) =  +  Rent ($) b. Choose a residual plot against theindependent variable. SelectScatter diagram 1Scatter diagram 2Scatter diagram 3None ofthese choicesItem 3 c. Do the assumptions about the error term andmodel form seem reasonable in light of the residual plot? SelectRelationship is significant and should assume a linearrelationship, due to residual plot.Relationship is significant butshouldn't assume a linear relationship, due to residualplot.Relationship is not significant and should assume a linearrelationship, due to residual plot.Relationship is not significantand shouldn't assume a linear relationship.Item 4

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Question 9 of 10

Exercise 12.49