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Questions › DSE › DSE 2019 › Q27
0 marksEconometrics › Linear regression and OLS › t-tests, F-tests and testing restrictionsModerateabout 2 min

DSE 2019 Question 27: Linear regression and OLS

Scenario 3: Data from a random sample of 107 home sales in 2003 yielded the regression P^=119.2+0.485 BD+23.4 BA+0.156 HS+0.002 PS+0.090 A−35.6 PC\hat P=119.2+0.485\,BD+23.4\,BA+0.156\,HS+0.002\,PS+0.090\,A-35.6\,PCP^=119.2+0.485BD+23.4BA+0.156HS+0.002PS+0.090A−35.6PC, with standard errors (23.9),(2.61),(10.76),(0.011),(0.00048),(0.311),(10.5)(23.9),(2.61),(10.76),(0.011),(0.00048),(0.311),(10.5)(23.9),(2.61),(10.76),(0.011),(0.00048),(0.311),(10.5) respectively. R2=0.72R^2=0.72R2=0.72, SER=41.5SER=41.5SER=41.5. PPP is price or value (Rs. 1000), BDBDBD is number of bedrooms, BABABA is number of baths, HSHSHS is house size (sq. ft.), PSPSPS is plot size (sq. ft.), AAA is age (years), and PCPCPC is a dummy =1=1=1 if the house is in poor condition and 000 otherwise.

Are the coefficients of BABABA and PCPCPC individually statistically significant at the 5% level?

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Scenario 3: Data from a random sample of 107 home sales in 2003 yielded the regression P̂=119.2+0.485 BD+23.4 BA+0.156 HS+0.002 PS+0.090 A-35.6 PC, with standard errors (23.9),(2.61),(10.76),(0.011),(0.00048),(0.311),(10.5) respectively. R²=0.72, SER=41.5. P is price or value (Rs. 1000), BD is number of bedrooms, BA is number of baths, HS is house size (sq. ft.), PS is plot size (sq. ft.), A is age (years), and PC is a dummy =1 if the house is in poor condition and 0 otherwise. Are the coefficients of BA and PC individually statistically significant at the 5% level? (A) Both coefficients are significant (B) The coefficient of BA is significant, but that of PC is not (C) Neither coefficient is significant (D) The coefficient of PC is significant, but that of BA is not

Also written as: Scenario 3: Data from a random sample of 107 home sales in 2003 yielded the regression P_hat=119.2+0.485 BD+23.4 BA+0.156 HS+0.002 PS+0.090 A-35.6 PC, with standard errors (23.9),(2.61),(10.76),(0.011),(0.00048),(0.311),(10.5) respectively. R^2=0.72, SER=41.5. P is price or value (Rs. 1000), BD is number of bedrooms, BA is number of baths, HS is house size (sq. ft.), PS is plot size (sq. ft.), A is age (years), and PC is a dummy =1 if the house is in poor condition and 0 otherwise. Are the coefficients of BA and PC individually statistically significant at the 5% level?

Linear regression and OLS has come up 74 times in 7 exams since 2008.

What this question tests

This question is on t-tests, F-tests and testing restrictions, part of Linear regression and OLS in Econometrics.

Testing a single coefficient, several coefficients, or a linear restriction.

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