ECON2206 Assignment 1 [pic] Question A [pic] in the equation above describes the relationship between price of the house and the size of the lot. The coefficient of “log(lotsize)” is the estimated elasticity of “price” with respect to “lotsize”. From this number‚ we learn that in this model‚ an additional square feet increase to the lotsize would increase the house price on average by[pic] %‚ assuming that the other independent variable in this model are held constant. Question B I would
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ECON2206 ASSIGNMENT 1 Question 1 MLR 1 (Linear in Parameters) – From observation of equation (2) we can see that the model in the population can be written in the form y = β0 + β1X1 + …+ βkXk + u. In the model β1‚ β2 …βk are the unknown parameters of interest and u is an unobserved random error. log(TCi) = β1+ β2log(Qi) + β3log(pi1) + β4log(pi2) + β5log(pi3) + ui (2) MLR 2 (Random Sampling) – This assumption assumes a random samples of n observations. We deduce that it would be infeasible to
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