Question 2

QUESTION 2 Suppose a different family purchases a 2,500 square foot house, and also plans to undertake extensions that will increase the total size of the house by 500 square feet. Again, use the results in column {1}, and assume the house has a pool, is in excellent condition, but does not have a view {which will not change after the extensions}. Without performing any further calculations, what are you able to conclude about the expected impact of the extensions on this house? 0 5' Both the estimated dollar increase and the estimated percentage increase in price would be the same as for the house described in Question 1, O b' The estimated percentage increase in price would be the same as for the house described in Question 1. but the estimated dollar increase would be higher. 0 c. Both the estimated dollar increase and the estimated percentage increase in price would be higher than for the house described in Question 1. 0 d' The estimated percentage increase In price would be the same as for the house described in Question 1. but the estimated dollar increase would be lower. Suppose a researcher collects data on houses that have been sold in a particular neighbourhood over the past year, and obtains the regressions results in the table shown below. This table is used for Questions 1-6. Dependent variable: In(Price) Regressor (1) (2) (3) (4) (5) Size 0.00042 (0.000038) In(Size) 0.69 0.68 0.57 0.69 (0.054) (0.087) (2.03) (0.055) In(Size) 0.0078 (0.14) Bedrooms 0.0036 (0.037) Pool 0.082 0.071 0.071 0.071 0.071 (0.032) (0.034) (0.034) (0.036) (0.035) View 0.037 0.027 0.026 0.027 0.027 (0.029) (0.028) (0.026) (0.029) (0.030) Pool X View 0.0022 (0.10) Condition 0.13 0.12 0.12 0.12 0.12 (0.045) (0.035) (0.035) (0.036) (0.035) Intercept 10.97 6.60 6.63 7.02 6.60 (0.069) (0.39) (0.53) (7.50) (0.40) Summary Statistics SER 0.102 0.098 0.099 0.099 0.099 R2 0.72 0.74 0.73 0.73 0.73 Variable definitions: Price = sale price ($); Size = house size (in square feet); Bedrooms = number of bedrooms; Pool = binary variable (1 if house has a swimming pool, 0 otherwise); View = binary variable (1 if house has a nice view, 0 otherwise); Condition = binary variable (1 if real estate agent reports house is in excellent condition, 0 otherwise)