Question

IL. (1Ipts) You are given the following estimated equation: log(price) =-0.676 + 0.848 log(sqrft)-0.05 1bdrrns-0.269colonial + 0.098bdrms * colonial Std. Errors (0.693) (0.1003) (0.060) n 88, R-squared -0.5793 (0.216) (0.0636) Where the variables are described as follows: price sarfi the size of the house, in squared feet hdrms the number of bedrooms in the house colonial- if the house has a colonial architectural style, and 0 otherwise. bdrms colonial interaction variable the house price, in $1000 a. Provide an appropriate interpretation for the coefficient estimate of the variables drms colonial', and 'bdrms *colonial' repectively. (3pts) b. What is wrong with the statement: "holding everything else constant, the estimated increase in the house price is 0.0848% for an additional squared-foot"? (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 on the price i) of a colonial house and, ii) of a non-colonial house, ofthree additional bedrooms that will each add a 2% to the house square-footage (2pts)

Answer 1

0) The Griver infommation Co ob34) Si2e in uane feet or which the log83ihm aR (he p ,ce.f a house in $1000 daferds The vaniable colonial descnies the colonial anchi tedunal style → Tt is a q ualittive waziable which is conented よー into à dummy vasiable omeans the hose dn't have the Coloniat anchi tectunal style ohereas Imeans t has a colonial anchi tectunaf style. The em iable d-n(#Colonial is an interaction VAniable → It describes 4e.cHect of changing the size of the house onhepmice defnding ה

2 从e house hasthe colonial anchitectum af style The coefficient ofoal hednoom is us, the estimafed incnease in house pnike つん.[ estrm )To check whether (he individual Coef위 cient ane Signi-ficanf we will ue t - statisti -) The t-statistics fo가 Ч degrees of. dt s- Significance level Rmhe two-tailed testis 2 c t-state fo7 individcraf CoetPi cient o.gvg/어。01 Šaft: 4,W"y.: Significant · oth'a (o.tló sửnificant ·LW"1: Colonial e) Estimated value bedoom calonia house 136

Est imated valve ef 3- bed noom hose s so sft non - colonial 0 2699 o 76 ()