02 May Let's assume there are no other housing qualities besides the three listed above – distan
Let's assume there are no other housing qualities besides the three listed above – distance to
school, number of bedrooms, and size of backyard. Also, all families prefer being closer to the
school, a greater number of bedrooms, and a larger backyard. We assume that there is no
random noise that affects prices.
1. House 1: 3 bedrooms, Close, 1000 square foot yard. $85,000
2. House 2: 3 bedrooms, Close, 2000 square foot yard. $95,000
3. House 3: 2 bedrooms, Close, 2500 square foot yard. $80,000
4. House 4: 4 bedrooms, Distant, 2000 square foot yard. $?
If the number of bedrooms and the size of the backyard are linear in prices, and that distance
to the school is binary (and being distant” costs $0), give the prices for each attribute and for
House 4. (remember: the cost of having 0 bedrooms or 0 square feet is also 0.)
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