You are consulting for a large real estate firm. You have been asked to construct a model that can predict listing prices based on square footages for homes in the city you’ve been researching. You have data on square footages and listing prices for 100 homes.
Which variable is the independent variable (x) and which is the dependent variable (y)?
Click on any cell. Click on Insert→Scatter→Scatter with markers (upper left).
To add a trendline, click Tools→Layout→Trendline→Linear Trendline
Does the scatterplot indicate observable correlation? If so, does it seem to be strong or weak?
In what direction?
Click on Data→Data Analysis→Regression→OK. Highlight your data (including your two headings) and input the correct columns into Input Y Range and Input X Range, respectively. Make sure to check the box entitled “Labels”.
What is the Coefficient of Correlation between square footage and listing price?
Does your Coefficient of Correlation seem consistent with your answer to #2 above? Why or why not?