The following equation relates housing prices in Sackville to the distance from

Question

The following equation relates housing prices in Sackville to the distance from the university, the number of rooms and the average ambient noise in decibels measured in the house's yard. Log(price) = B_0 + B_1 log(distMTA) + B_2rooms+B_2rooms + B_3 noise + u What is the probable sign of B_1? What is the interpretation of B_1? Explain. Why might distMTA [or more precisely log (distMTA)] and noise be negatively correlated? If distMTA and noise are negatively correlated, does the following regression produce an upward or downward biased estimator of B_1? log(price) = B_0 + B_1 log (distMTA) + B_2rooms + u Using data collected over the past year, the following equations were estimated: log(price) = 9.24-0.717*log(distMTA) + 0.306* rooms + u, R^2 = .319 log(price) = 9.23-0.718* log(distMTA) + 0.306*rooms + 0.001* noise + u, n = 201, R^ = .320 Is the relationship between the simple and multiple regression estimates of B_1 what you would have predicted given your answer in part (b)? Explain

Explanation / Answer

Whenever there is a negative correlation between the two variables, the regression produces a downward biased estimator of the regression coefficients.

For the part(D), I need answers from part (B).

However, a similar question to the one you are trying is already solved in the link given below,

http://www.konstantinvasilev.com/Data/EC352/Week-03/ec352-w03-ex-sol.pdf

https://open.uct.ac.za/bitstream/item/2137/Tutorial_8.pdf?sequence=8

Refer to those problems to understand better.

Hope this helps.

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.