i) II) III) What are the probable signs of P₁and P₂? What are the interpretation of B₁and B₂? Explain. Why might nox [or more precisely, log(nox)] and rooms be negatively correlated? If this is the case, does the simple regression of log(price) on log(nox) produce an upward or a downward biased estimator of B₁? Using the data in HPRICE2 the following equations were estimated: log(price) = 8.5 -0.98* log(nox) +u, n = 1500, R² = 0.30 log(price) = 6.4-0.56 * log(nox) + 0.34* room + u. n = 1500. R² = 0.54

i) II) III) What are the probable signs of P₁and P₂? What are the interpretation of B₁and B₂? Explain. Why might nox [or more precisely, log(nox)] and rooms be negatively correlated? If this is the case, does the simple regression of log(price) on log(nox) produce an upward or a downward biased estimator of B₁? Using the data in HPRICE2 the following equations were estimated: log(price) = 8.5 -0.98* log(nox) +u, n = 1500, R² = 0.30 log(price) = 6.4-0.56 * log(nox) + 0.34* room + u. n = 1500. R² = 0.54

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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