c) Now suppose you are able to obtain another variable: the number of previous b

Question

c) Now suppose you are able to obtain another variable: the number of previous buyers who have given the seller a positive rating. It turns out that this variable has a positive (and statistically significant) coefficient when included in equation (1). For each of the coefficients in equation (1), would you expect the coefficient to change? If so, in which direction?

Suppose you want to estimate the price of an iPad at the internet auction site eBay, and you obtain the following equation: PRICE 109.24 54.99NEW 20.44SCRATCH0.73BIDDERS (5.34) (0.59) N 215 where the standard errors are in parentheses, and: PRICEi is the price at which iPad i is sold on eBay - NEW is a dummy variable that is 1 if iPad i is new i SCRATCHi is a dummy variable that is 1 if iPad i has any scratches BIDDERSi is the number of bidders on iPad i

Explanation / Answer

(c) yes, it will be cetainly changed .

since the new variable has a positive (and statistically significant) coefficient when included in equation so direction will not be changed. so NEW WILL HAVE POSITIVE IMPACT, SCRATCH WILL HAVE NEGATIVE IMPACT AND BIDDERS WILL HAVE POSTIVE IMPACT. thier significance level may be changed....

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