We conduct a study to explain house prices (in thousands of dollars) in Montreal. We run the following multiple regression model using 100 observations: House prices = 0 + 1(Areai) + 2(Number of Bedroomsi) + 3(Year of Constructioni) + i

The explanatory variables are: (i) Area, a dummy variable (where Downtown = 1, and Other = 0); (ii) Number of Bedrooms; and (iii) Year of Construction. We obtained the following results:

ANOVA

df SS MS

Regression 3 5523.709 1841.57

Residual A 335.5119 3.505333

Total 99 5861.221

Coefficients Standard Error t Stat P-value Lower 95% Upper 95%

Intercept 39.75415 31.3013 1.270048 0.207137 22.3784 101.8867

Area B 0.374814 13.72036 0.000000 4.398583 5.886582

Year of Construction 0.03474 0.015665 2.2176 C 0.003644 0.065835

Number of Bedrooms 5.000415 0.133277 37.51899 0.000000 4.735863 D

1. (2 points) What is the F-statistic for the above model?

Answer: (A) 525.362355 (B) 0.00190345 (C) 16.4635263 (D) 0.06074032

2. (2 points) Approximately, what is the price of a 3-bedroom house in downtown if the construction year is 2015?

Answer: (A) $129.899 (B) $129,899 (C) $124.756 (D) $124,756

3. (2 points) Now suppose you don't care about the year of construction. Instead you want to test the effect of each specific period {1980s, 1990s, 2000s, 2010s} in your model. How would you write the regression equation?

Answers: (A) Assuming 2010s in excluded: Wagesi = 0+1(Areai)+2(NumberofBedroomi)+3(1980si)+4(1990si)+5(2010si)+i

(B) Assuming 2010s is included: Wagesi = 0+1(Areai)+2(NumberofBedroomi)+3(1980si)+4(1990si)+5(2010si)+i

(C) Assuming 2010s is excluded: Wagesi = 0+1(Areai)+2(NumberofBedroomi)+3(1980si)+4(1990si)+5(2000si)+i

(D) Assuming 2010s is excluded: Wagesi = 0 + 1(Areai) + 2(NumberofBedroomi) + 3(1980si + 1990si + 2000si) +