Question: The file Mid city.xls contains data on 128 recent sales in Mid city. For each sale, the file shows neighborhood (1,2 and 3) in which the house is located, number of offers made on the house, the square footage, whether the house is made primarily of brick, the number of bathrooms ,the number of bedrooms, and the selling price. Neighborhoods 1&2 are more traditional neighborhoods, whereas neighborhood 3 is a newer, more prestigious neighborhood.

Use regression to estimate and interpret the pricing structure of houses in Mid city. Here are some considerations.

a) Is there a “premium” for brick house, everything else being equal?

b) Is there a premium for a house in neighborhood3, everything else being equal?

c) Is there an extra premium for a brick house in neighborhood 3,in addition to the usual premium for a brick house?

d) For purpose of estimation and prediction, could neighborhoods1&2 be collapsed into a single “older” neighborhood?