Problem 4 | Complete Solution

A builder of residential houses is trying to better estimate the number of construction workers it will take to build its houses.  They have collected data on 36 houses built in the past year.  In addition to the number of Construction Worker Hours, the data set contains:
•    Square footage of the house being built
•    Whether the neighborhood was Upscale (with the alternative being “Good”)
•    Whether the construction quality was “High End” (with the alternative being “Standard”)

The following is the output of a regression of Construction Worker Hours against all of the above variables.
 

(a)    What is the percent of the variation that is NOT explained by the model?

(b)    Write down the Economic interpretation of the Neighborhood = Upscale coefficient:

(c)    Using these results, what is the average difference between the number of hours it takes to build a High End house versus a Standard one?

(d)    Given the regression equation, predict the number of construction hours required to build a 4,000 square foot house with High End construction in a good neighborhood.