Question - Assessment value versus sales price. Real estate is typically reassessed each year to calculate property taxes. This assessed value, however, is not necessarily the same as the fair market value of the property. Table 10.2 summarizes an SRS of 30 houses recently sold in a midwestern city.7 Both variables are measured in thousands of dollars.
(a) Inspect the data. How many have a selling price greater than the assessed value? Do you think this trend would be true for the larger population of all houses recently sold? Explain your answer.
(b) Make a scatterplot with assessed value on the horizontal axis. Briefly describe the relationship between assessed value and selling price.
(c) Report the least-squares regression line for predicting selling price from assessed value.
(d) Obtain the residuals and plot them versus assessed value. Is there anything unusual to report? If so, explain.
(e) Do the residuals appear to be approximately Normal? Explain your answer.
(f) Based on your answers to parts (b), (d), and (e), do the assumptions for the linear regression analysis appear reasonable? Explain your answer.