Question

Data were collected from a random sample of 220 home sales from a comunity in 2013. Let Price denote the selling price (in $1000), BDR denote the number of bedrooms, Bath denote the number of bathrooms, Hsize denote the size of the house (in square feet), Lsize denote the lot size (in square feet), Age denote the age of the house (in years), and Poor denote a binary variable that is equal to 1 if the condition of the house is reported as “poor”. An estimated regression yields ˆ Price = 119.2+ (23.9) .485BDR+ 23.4Bath+ .156Hsize+ .002Lsize+ .09Age-48.8Poor (2.61) (8.94) (.011) (.00048) (.311) (10.5) ¯ R2 =0.72 SER=41.5 a) (3 points) Is the coefficient on BDR statistically significantly different from zero? b) (3 points) Typically five-bedroom houses sell for much more than two-bedroom houses. Is this consistent with your answer to (a) and with the regression more generally? c) (3 points) A homeowner purchases 2000 square feet from an adjacent lot. Construct a 99% confidence interval for the change in the value of her house. d) (3 points) Lot size is measured in square feet. Do you think that another scale might be more appropiate? Why or why not? e) (3 points) The F-statistic for omitting BDR and Age from the regression is F=0.08. Are the coefficients on BDR and Age statistically different from zero at the 10% level (critical value=2.3)?