Reported in the table below are estimation results for three residential housing price models. The dependent...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Reported in the table below are estimation results for three residential housing price models. The dependent variable is defined as home sales price measured in thousands of dollars. The models contain three independent variables expressed as natural logarithms: Ln(Heated Area), Ln(Bedrooms), and Ln(Bathrooms). The first set of estimation results were obtained from a random sample of 800 home sales in Orange County. The second set of estimation results were obtained from a random sample of 1200 home sales in Volusia County. The third set of estimation results were obtained from 'pooling' the two datasets into a single dataset. The sample mean of the dependent variable is 172.42 in Orange County and 134.05 in Volusia County; the sample mean of Heated Area is 1,780.15 square feet in Orange County and 1,674.52 square feet in Volusia County; the sample mean number of Bedrooms is 3.26 in Orange County and 2.91 in Volusia County; and the sample mean number of Bathrooms is 2.16 in Orange County and 2.03 in Volusia County. Variable Ln(Heated Area) Ln(Bedrooms) Ln(Bathrooms) Intercept Sum of Squares: A. Orange County Model B. Estimated Coefficient 259.72 -77.21 49.38 -1,718.28 Standard Error 12.57 16.81 14.00 82.62 SSR = 4,941,050 ESS=7,097,210 Volusia County Model Standard Error 6.54 8.21 7.59 43.47 Estimated Coefficient 177.43 -18.22 23.35 -1,171.92 SSR = 2,914,471 ESS = 3,460,789 Pooled Model Estimated Coefficient 208.47 -18.71 38.73 -1,398.44 Standard Error 6.69 8.38 7.58 44.292 NOTE: SSR = Sum of Squared Residuals; ESS = Explained (Regression) Sum of Squares From the Orange County model, estimate the mean marginal effect of each independent variable at the respective sample mean, and interpret the meaning of each of the estimated mean marginal effects. SSR = 8,677,195 ESS 10,443,428 From the Orange County and Volusia County models, estimate the mean elasticity of home price with respect to heated area at the sample means, and interpret the meaning of each of the estimated mean elasticities. C. D. Does the Orange County model or the Volusia County model better explain the variation in sales price? That is, which model provides a better fit? Provide numerical evidence to support your answer. From the Pooled model, predict the mean sales price of a 3 bedroom, 2 bathroom property with 2,000 square feet of heated area. Conduct a Chow test at the 5% level to determine if the coefficients from the Orange County model jointly differ from the Volusia County model. Specifically, perform the following steps. E. Specify the null hypothesis and the alternative hypothesis. F. G. Calculate the F-statistic needed to conduct the hypothesis test and identify the critical value of F at the 5% level. Show all calculations. Do you reject or fail to reject the null hypothesis? What is your conclusion regarding the equality of the coefficients between the two county-specific regression models? Explain. Reported in the table below are estimation results for three residential housing price models. The dependent variable is defined as home sales price measured in thousands of dollars. The models contain three independent variables expressed as natural logarithms: Ln(Heated Area), Ln(Bedrooms), and Ln(Bathrooms). The first set of estimation results were obtained from a random sample of 800 home sales in Orange County. The second set of estimation results were obtained from a random sample of 1200 home sales in Volusia County. The third set of estimation results were obtained from 'pooling' the two datasets into a single dataset. The sample mean of the dependent variable is 172.42 in Orange County and 134.05 in Volusia County; the sample mean of Heated Area is 1,780.15 square feet in Orange County and 1,674.52 square feet in Volusia County; the sample mean number of Bedrooms is 3.26 in Orange County and 2.91 in Volusia County; and the sample mean number of Bathrooms is 2.16 in Orange County and 2.03 in Volusia County. Variable Ln(Heated Area) Ln(Bedrooms) Ln(Bathrooms) Intercept Sum of Squares: A. Orange County Model B. Estimated Coefficient 259.72 -77.21 49.38 -1,718.28 Standard Error 12.57 16.81 14.00 82.62 SSR = 4,941,050 ESS=7,097,210 Volusia County Model Standard Error 6.54 8.21 7.59 43.47 Estimated Coefficient 177.43 -18.22 23.35 -1,171.92 SSR = 2,914,471 ESS = 3,460,789 Pooled Model Estimated Coefficient 208.47 -18.71 38.73 -1,398.44 Standard Error 6.69 8.38 7.58 44.292 NOTE: SSR = Sum of Squared Residuals; ESS = Explained (Regression) Sum of Squares From the Orange County model, estimate the mean marginal effect of each independent variable at the respective sample mean, and interpret the meaning of each of the estimated mean marginal effects. SSR = 8,677,195 ESS 10,443,428 From the Orange County and Volusia County models, estimate the mean elasticity of home price with respect to heated area at the sample means, and interpret the meaning of each of the estimated mean elasticities. C. D. Does the Orange County model or the Volusia County model better explain the variation in sales price? That is, which model provides a better fit? Provide numerical evidence to support your answer. From the Pooled model, predict the mean sales price of a 3 bedroom, 2 bathroom property with 2,000 square feet of heated area. Conduct a Chow test at the 5% level to determine if the coefficients from the Orange County model jointly differ from the Volusia County model. Specifically, perform the following steps. E. Specify the null hypothesis and the alternative hypothesis. F. G. Calculate the F-statistic needed to conduct the hypothesis test and identify the critical value of F at the 5% level. Show all calculations. Do you reject or fail to reject the null hypothesis? What is your conclusion regarding the equality of the coefficients between the two county-specific regression models? Explain.
Expert Answer:
Answer rating: 100% (QA)
ANSWER Crange Country Model Reject the null hypothesis There suffierent evidente to conclude that th... View the full answer
Related Book For
Posted Date:
Students also viewed these finance questions
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
The data in the table below are for retail sales in book stores by quarter. a. Plot these data and examine the plot. Does this view of the data suggest a particular smoothing model? Do the data...
-
The data in the table below are the results of a random sample of recent home sales in your neighborhood that your boss has asked you to use to estimate the relationship between the selling price of...
-
Uniform rod AB of length l and mass m lies in a vertical plane and is acted upon by a couple M. The ends of the rod are connected to small rollers which rest against frictionless surfaces. (a)...
-
The Iwata Oil Company incurred costs of $6 million during 2010 drilling for oil. Half the costs resulted in oil being found and half resulted in dry wells. The company expects the oil wells to...
-
Which of the diagrams shown here corresponds to the reaction between AgOH(s) and HNO3 (aq)? Write a balanced equation for the reaction. The green spheres represent the Ag1 ions and the red spheres...
-
Which type of bond is unsecured? a. Common bond b. Mortgage bond c. Serial bond d. Debenture bond
-
Below is a variable costing income statement for Wilner Glass Company, a maker of bottles for the beverage industry. For the coming year, the company is considering hiring two additional sales...
-
A manufacturing company which produces a range of products has developed a budget for the life - cycle of a new product, P . The information in the following table relates exclusively to product P:...
-
1. a. How much did the materials cost per unit change between June and July? b. How much did the conversion cost per unit change between June and July? 2. Which is the optimal choice of material and...
-
1) Find a Commercial video which has gone viral and analyze it using the STEPPS framework. Which components of the framework can you identify in the video? State the most observable attribute if...
-
What is meant by the terms income inequality and income distribution?
-
Can two countries gain from trade if the opportunity cost ratios relating to the production of goods they can both produce is the same? Explain.
-
Why is technological progress important in improving growth rates in any economy?
-
Why is an understanding of belief systems important in assessing approaches to dealing with poverty and inequality?
-
What is the steady-state equilibrium?
-
Reflect on the approaches to recruitment and selection processes. Under what circumstances might you propose a particular approach and under what circumstances might you advise against it? (100 Marks)
-
For the data in Exercise 17-19, use the FIFO method to summarize total costs to account for, and assign these costs to units completed and transferred out, and to units in ending work in process....
-
In a production facility, an accurate estimate of hours needed to complete a task is crucial to management in making such decisions as hiring the proper number of workers, quoting an accurate...
-
Use the applets entitled Simulating the Probability of Rolling a 6 and Simulating the Probability of Rolling a 3 or 4 to explore the additive rule of probability. a. Explain why the applet Simulating...
-
"Frontier medicine" is a term used to describe medical therapies (e.g., energy healing, therapeutic prayer, spiritual healing) for which there is no plausible explanation. The Lancet (July 16, 2005)...
-
What are the responsibilities of the governments toward the stateless? Do the United States and other powerful nations have responsibilities toward groups such as the Rohingya? Following the...
-
The United States and Canada are two of only 33 countries that have jus soli, the right to citizenship of any individual born on their soil. Why do you think this right is so limited, and do you...
-
What are stratified societies and what kinds of social systems are they identified with?
Study smarter with the SolutionInn App