Question

Suppose we wanted to predict the selling price of a house, using its size, in a certain area

of a city. A random sample of six houses were selected from the area. The data is

presented in the following table with size given in hundreds of square feet, and sale price

in thousands of dollars.:

Temperature (oF): Xi	16	28	13	22	25	19
Number of Calls: Yi	95	120	70	115	130	85

We are interested in fitting the following simple linear regression model: Y = Xβ + ε

Use the matrix approach to calculate the following:

a)   Calculate a 95% confidence interval for the mean of Y when X = 20.

b)   Calculate a 95% prediction interval for an individual new value of Y when X = 20.

Answer 1

The calculation of confidence and prediction interval is explained below using matrix approach:

Hope this helps!!

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