Question 4

QUESTION 4 In column (4), does the elasticity of price with respect to size depend on the size of the house? Use a 5% level of significance for the test. The critical value is (two decimal places) The test statistic is ( two decimal places) Is there sufficient evidence to conclude that the elasticity of price with respect to size depends on the size of the house? (Type Yes or No)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)