2. Are rent rates influenced by the student population in a town? We, thus, wish to test the following relationship: log(rent) = Bo + B1 log(pop) + ß2 log(avginc) + Bzpctstu + u where log is the natural logarithm, rent is the average monthly rental paid on rental units, pop is the total city population, gyginc is the average city income and petstu is the student population as a percentage of the total population. Based on the above model the following equation is estimated: log(rent) = 0.043 + 0.066 log(pop) + 0.570 log(avginc) + 0.0056pctstu (0.081) (0.844) (0.039) (0.0017) n= 64, R² = 0.458 (standard errors in parentheses) a) Test the null hypothesis that the size of the student population has no ceteris paribus effect on the monthly rent against the alternative that there is an effect at 5% significance level. b) What signs do you expect for B1 and B2?

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answeres to parts a b c with working

2. Are rent rates influenced by the student population in a town? We, thus, wish to test the following
relationship:
log(rent) = Bo + B1 log(pop) + ß2 log(avginc) + Bzpctstu + u
where log is the natural logarithm, rent is the average monthly rental paid on rental units, pop is
the total city population, gyginc is the average city income and petstu is the student population as
a percentage of the total population. Based on the above model the following equation is
estimated:
log(rent) = 0.043 + 0.066 log(pop) + 0.570 log(avginc) + 0.0056pctstu
(0.081)
(0.844) (0.039)
(0.0017)
n= 64, R² = 0.458 (standard errors in parentheses)
a) Test the null hypothesis that the size of the student population has no ceteris paribus effect on
the monthly rent against the alternative that there is an effect at 5% significance level.
b) What signs do you expect for B1 and B2?
Transcribed Image Text:2. Are rent rates influenced by the student population in a town? We, thus, wish to test the following relationship: log(rent) = Bo + B1 log(pop) + ß2 log(avginc) + Bzpctstu + u where log is the natural logarithm, rent is the average monthly rental paid on rental units, pop is the total city population, gyginc is the average city income and petstu is the student population as a percentage of the total population. Based on the above model the following equation is estimated: log(rent) = 0.043 + 0.066 log(pop) + 0.570 log(avginc) + 0.0056pctstu (0.081) (0.844) (0.039) (0.0017) n= 64, R² = 0.458 (standard errors in parentheses) a) Test the null hypothesis that the size of the student population has no ceteris paribus effect on the monthly rent against the alternative that there is an effect at 5% significance level. b) What signs do you expect for B1 and B2?
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