Question

II. (11pts) You are given the following estimated equation: log(price) 4.83+0.000347sqrft + 0.0117bdrms-0.056colonial +0.000068srft colonial Std. Errors (0.013) (0.000061) (0.0310) (0.015) (0.000074) n 88, R-square -0.6056 e tri Where the variables are described as follows: price = the house price, in $1000 sar-the size of the house, in squared feet bdrms the number of bedrooms in the house colonial- 1 if the house has a colonial architectural style, and 0 otherwise. sarfi colonial interaction variable Sser a. Provide an appropriate interpretation for the coefficient estimate of the variables 'sqrft' colonial', and 'sarfi'colonial repectively. (3pts) b. What is wrong with the statement: "holding everything else constant, the estimated increase in the house price is 0.117% for an additional bedroom"? (1pt) C. Are the partial slope coefficients individually significant at 5%? (4pts) d. Are the partial slope coefficients jointly significant at 5%?(1pt) e. Calculate the estimated effect of three additional bedrooms of 150 sqrft each, on the price of: i) a colonial house; ii) a non-colonial house (2pts)

Answer 1

Answen The Griven infomtion Co o31) Co- Co ols R.squane ะ: o. Gost n:88 Phice he house pmice -$1000 Cofoniali the house has a coonial nchitectunal Stde , And othenoise a) The vaae etscnibe the site of he house in syuare Peet Iohe given model it is inte pmeted as the of a house in lowo depends

2 The vnaledescibes e cofonial аз chitectunal style > Tt is a ualitative Vaniabe whichis Convesrted inko a dummy vaniable the us doesn't have bhe coknial means anchi te ctunal tye means it has a Colonial an chitectural styk * The vaiable santcolonial is an intenaction Vaniable It escibesffet of changing He size gee e on e pica deperoing on whehen has the Colonial anchitectunal styb the house The coeficient of an additional hadoom e estimated inc ease in house mice:Har fem an additional hedmom insteayop 0-11ㅋy , check wheben the individuaf Coekßicient Significant ue woilf use t-ststistics The t y deees of at Sy Ane statistics on

Signifi cance level thewo. taed testts → t-state for an individual coefficient S$ t o.ooo347/o.ooor 6 I =-ς. 68- Sion谢 art bd7ms- o.ol/7/o.a31 二0.377-not significant 919 not Signi ficant ラ Estimated value of 3-tenon, lfosPft Colenial house i's Value of 3-hd noon, lfospre t → Estimate Lie n-Colonal house is