Solved - Use The Data in HPRICE1.RAW To Estimate The Modelprice ...

 





Tex extb tboo ook k So Solu luti tion onss

Expe Ex pert rt Q& Q&A A

Stud St udy y Pa Pack ck

Prac Pr acti tice ce

 



Search

Find solutions for your homework

home / study / business / business statistics / business statistics solutions manuals / introductory econometrics / 4th edition / chapter 3 / problem 2ce

Introductory Econometrics  Econometrics  (4th Edition) 

Post a question Answers from our experts for your tough homework questions

See this solution in the app

Enter question

Show all steps:

15 Bookmarks

Chapter Cha pter 3, Problem 2CE

O

Problem

Continue to post 20 questions remaining

Use the data data in HPRICE1.RAW HPRICE1.RAW to estimate the model model price = β0 + β1sqrft + β1sqrft + β2bdrms β2bdrms + u, where price is price is the house price measured measured in thousands of dollars. dollars.

Snap a photo from photo from your phone to post post a question We'll send you you a one-time download link

(i) Write out the results in equation form. (ii) What is the t he estimated incr ease ease in price for for a house with one with one more bedroom, bedroo m, holding square footage constant? (iii) What is the estimated increase in price for a house with an additional bedroom that is 140

888-888-8888

Text me

square feet in size? Compare this to your answer in part (ii). By providing your phone number, you agree to receive a one-time automated text message with a link to get the app. Standard messaging rates may apply.

(iv) What percentage of the variation in price is explained by square footage and number of  bedrooms? (v) The first house in the sample has sqrft = 2,438 and bdrms = 4. Find the predicted selling price for this house from the OLS regression line.

My Textbook Solutions

(vi) The actual selling price of the first house in the sample was $300,000 (so price = 300). Find he residual for this house. Does it suggest that the buyer underpaid or overpaid for the house?

Step-by-step Step-by-st ep solution

Introductory Introduction Nutrition Econometrics to Chemical... Through... 4th Edition

Step 1  1 of 9

7th Edition

5th Edition

View all solutions

(i) The estimated model is written below:

The required estimated model can be obtained in Minitab by using below steps: 1. Go to Stat > Regression > Regression as shown in the below screenshot:

Comment

Step 2 of 9

2. The below dialog box opens. Enter the required variables corresponding to “Response” and “Predictors” headings. The updated dialog box is shown below:

Comment

Step 3 of 9

3. Click OK to get the below output:

The estimated regression equation is:

With:

Comment

Step 4 of 9

(ii) Holding square footage constant, the above equation can be written as:

So,, est So estim imat ated ed pr pric ice e inc incre reas ases es by 15 15.2 .20 0 whi which ch me mean ans s

beca be caus use e pri price ce me meas asur ured ed in

housands of dollars.

Comment

Step 5 of 9

(iii) The equation given in part (i) is given below:

Here,

Therefore,

Comment

Step 6 of 9

So,, est So estim imat ated ed pr pric ice e inc incre reas ases es by 33 33.1 .12 2 whi which ch me mean ans s

beca be caus use e pri price ce me meas asur ured ed in

housands of dollars. Because the size of the house is increasing, this is a much larger effect han in (ii).

Comment

Step 7 of 9

(iv) Since

, about

of the variation in price is explained by square footage and

number of bedrooms.

Comment

Step 8 of 9

(v) The equation given in part (i) is given below:

Here:

Therefore, the predicted price can be calculated as shown below:

The predicted price is

.

Comment

Step 9 of 9

(vi) From the above part, the estimated value of the home based only on square footage and number  of bedrooms is $353,544. The actual selling price was $300,000, which suggests the buyer  underpaid by some margin. But, of course, there are many other features of a house (some that cannot even be measured) that affect price and have not been controlled in here.

Comments (1)

in r by gael kim

Submit

Was this solution helpful?

52

1

Recommended solutions for you in Chapter 3 Chapter 3, Problem 5CE

Chapter 3, Problem 13P

Confirm the partialling out interpretation of the OLS estimates by explicitly doing the partialling out for  Example. This first...

(i) Consider the simple regression model y = β0 + β1x + u under the first four Gauss Markov assumptions. For some function g(x)...

See solution

See solution

See more problems in subjects you study

COMPANY

LEGAL & POLICIES

CHEGG P RODUCTS AND SERVICES

CHEGG NETWORK  

CUSTOMER SERVICE

About Chegg Chegg For Good

Advertising Choices Cookie Notice

Cheap Textbook Textbookss Chegg Coupon

Mobile Apps Sell Textboo Textbooks ks

EasyBib Internships.com

Customer Service Give Us Feedback

College Marketing Corporate Development Investor Relations Jobs

General Policies Intellectual Property Rights Terms of Use Global Privacy Policy

Chegg Play Chegg Study Help College Textbooks eTextbooks

Solutions Manual Study 101 Textbook Rental Used Textbooks

Thinkful

Join Our Affiliate Program Media Center Site Map

DO NOT SELL MY INFO Honor Code Honor Shield

Flashcards Learn Chegg Math Solver

Digital Access Codes Chegg Money

Help with eTextbooks Help to use EasyBib Plus Manage Chegg Study Subscription Return Your Books Textbookk Return Policy Textboo

 

© 2003-2021 Chegg 2003-2021 Chegg Inc. All rights reserved.