Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Econometrics Expert

This assignment data file contains 1500 houses sold in Stockton, California, during1996-­-1998.

The variable descriptions are as follows:

• Sprice = Selling price of home, dollars

• Livarea = living area, hundreds of square feet

• Age = age of home at time of sale, years

• Baths = number of bathrooms

• Beds = number of bedrooms

• Pool = 1 if home has pool, 0 otherwise

• Lgelot =1 if lot size > 0.5 acres, 0 otherwise.

Model 1:

Sprice = δ12livarea+ δ3Age+ δ4Beds+δ5Baths + e

Model 2:

Sprice =β1 + β2livarea + β3age + β4Beds+ β5Baths + β6livarea2 + β7age2+ ε

Model 3:

ln Sprice = α1 + α2livarea + α3livarea2+ α4age+ α5age2 + α6Beds+ ε ln=natural log

problem1) Plot each of Sprice and Age in a X-­-Y scatter plot and comment on their pattern.

(To obtain XY scatter plot in Gretl choose “View” and “Graph specified vars” and “X-­-Y scatter” and select the variables to the relevant boxes)

Model 1

problem2) Estimate Model 1 and report results. Do the signs of the estimates agree with your expectations? Describe.

problem3) Using Model1, test null hypothesis that each individual coefficient is equal to zero against alternative that it is not, at the 5% significance level and comment on your findings

problem4) Consider two houses that have the living areas of the same size, same number of bathrooms, and same number of bedrooms, but one is two years old and the other is ten years old. How much difference in the prices must an investor expect between two houses according to Model 1? Construct a 95% confidence interval for this difference in the prices and interpret your result

problem5) Test overall significance of the model at the 1% significance level. Interpret the test result.

problem6) A family of four children owns a house with a living area of 2,000 square feet (i.e. Livarea = 20). They are now considering an extension of living area by 200 square feet. How much will this extension be expected to increase price of the house? Test a hypothesis, at the 5% significance level, that increase in the price would be equal to $20,000 against it is more than $20,000.

Model 2

problem7) Estimate Model 2 and use an F-­- test to test that Livearea2 and Age2 are significant variables in the model? Use the 5% significance level and comment on your results.

Model 3

problem8) Estimate Model 3 and comment on your results.

problem9) Use Model 3 to predict the price of a 10-­-year-­-old house with a living area of 2,000 square feet, and three bedrooms. Comment on your answer

Models 2 and 3

problem10) Compare the results of Model 2 and Model 3 and select a preferred model. Give reasons for your choice.

Econometrics, Economics

  • Category:- Econometrics
  • Reference No.:- M93005
  • Price:- $60

Priced at Now at $60, Verified Solution

Have any Question? 


Related Questions in Econometrics

Module 09 written assignment - create a cover letterby now

Module 09 Written Assignment - Create a Cover Letter By now, you may have already begun to start your job search for your chosen career as a medical assistant. Resumes and cover letters are the first indication a potenti ...

1 a principles of microeconomics instructor regularly asks

1. A principles of microeconomics instructor regularly asks her class to give an example of an inferior good. "No matter how poor we might be," the students tell her, "ramen noodles are an inferior good." Explain why the ...

The bureau of labor statistics reported that in june 2010

The Bureau of Labor Statistics reported that in June 2010, the unemployment rate in the United States was 9.5 percent. In November 2007, prior to the beginning of the recession of 2007-2009, the BLS reported an unemploym ...

Suppose that the inverse demand for marching band music is

Suppose that the inverse demand for marching band music is given by P = $1,000 - Q. Because marching bands across the world produce music of sufficient quality at increasing marginal cost, the industry marginal cost is g ...

1 is zero unemployment achievable with stable prices is it

1. Is zero unemployment achievable with stable prices? Is it desirable? 2. What do you understand by the term the term NAIRU? Using an appropriate diagram, show how attempts by government to reduce unemployment below thi ...

In early 2008 many predicted that in a relatively short

In early 2008, many predicted that in a relatively short period of time, unleaded regular gasoline at the pump would be selling for over $4. Do some research on the price of gasoline. Have those dire predictions material ...

Under what conditions does the income effect reinforce the

Under what conditions does the income effect reinforce the substitution effect? Under what conditions does it have an offsetting effect? If the income effect more than offsets the substitution effect for a good, what do ...

Wyandotte chemical company sells various chemicals to the

Wyandotte Chemical Company sells various chemicals to the automobile industry. Wyandotte currently sells 30,000 gallons of polyol per year at an average price of $15 per gallon. Fixed costs of manufacturing polyol are $9 ...

In the first few chapters of this book we introduced the

In the first few chapters of this book, we introduced the notion of supply and demand. One of the first things we did was to derive the relationship between the price of a product and the quantity demanded per time perio ...

In 1976 a tragic release of one of the most toxic compounds

In 1976, a tragic release of one of the most toxic compounds known to man (dioxin, i.e., 2,3,7,8-tetrachlorodibenzo-p-dioxin) occurred in Seveso, Italy. The plant was manufacturing 2,4,5-trichlorophenol from 1,2,4,5-tetr ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro