House pricey is estimated as a function of the square footage of a house x ; a dummy variable d that equals 1 if the house has ocean views and 0 otherwise; and a product of this dummy and the square footage xd. The estimated house price, measured in $ 1,000s, is given by y = 80 + 0.12x + 40d + 0.01x d.
a. Compute the predicted price of a house with ocean views and square footage of 2,000 and 3,000, respectively.
b. Compute the predicted price of a house without ocean views and square footage of 2,000 and 3,000, respectively.
c. Discuss the impact of ocean views on the house price.