Question: Exercise 2. Stock and Watson (2019) Exercise 7.7 (Variation) Question 6.5 reported the following regression (where standard errors have been added): Price =110(22) + 0.600(0.15)

Exercise 2. Stock and Watson (2019) Exercise 7.7 (Variation) Question 6.5 reported the following regression (where standard errors have been added): Price =110(22) + 0.600(0.15) BDR + 20(7.10)Bath + 0.250(0.02) Hsize + 0.100(0.002)Lsize + 0.050(0.30) Age 60(10)Poor, R2 = 0.75, SER = 45

1. Is the coefficient on BDR statistically significantly different from 0?

2. Typically, five-bedroom houses sell for much more than two-bedroom houses. Is this consistent with your answer to part 1 and with the regression more generally?

3. A homeowner purchases 2000 square feet from an adjacent lot. Construct a 95% confidence interval for the change in the value of the house.

4. Lot size is measured in square feet. Do you think that another scale might be more appro- priate? Why or why not?

5. The F-statistic for omitting BDR and Age from the regression is F = 2.45. Are the coeffi- cients on BDR and Age statistically different from 0 at the 10% level?

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