Question: You have been asked by East Anglica Realty Ltd to

You have been asked by East Anglica Realty, Ltd., to provide a linear model that will estimate the selling price of homes as a function of family. There is particular concern for obtaining the most efficient estimate of the relationship between income and house price. East Anglica has collected data on their sales experience over the past 5 years, and the data are contained in the file East Anglica Realty, Ltd.
a. Estimate the regression of house price on family income.
b. Graphically check for heteroscedasticity.
c. Use a formal test of hypothesis to check for heteroscedasticity.
d. If you establish that there is heteroscedasticity in (b) and (c), perform another regression that corrects for heteroscedasticity.

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  • CreatedJuly 07, 2015
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