Mathematics, 11.02.2020 21:50 EmTerrell2933
Here we want to test whether the assessed housing price (assess below) is a rational prediction for the actual housing price (price below) using variables
price = house price
assess = the assessed housing value (before the house was sold)
Consider a simple regression model price = β1 + β2assess + ε, the assessment is rational if β1 = 0 and β2 = 1. The estimated equation and other related information are given by
price = −14.47 + 0.976 assess
(16.27) (0.049)
n = 88, RSS = 165,644, R2 = 0.82
where the numbers in the parentheses are standard errors. Assume that Classical Assumptions for
SLRM (Simple Linear Regression Model) hold. Do the following questions.
(a) From the estimation results predict a housing price when its assessed value equals $240,000.
(b) From R2 and Residual Sum of Squares (RSS) calculate the Explained Sum of Squares (ESS).
(c) Test the hypothesis that H0 : β1 = 0 against the two-sided alternative.
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Here we want to test whether the assessed housing price (assess below) is a rational prediction for...
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