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Questions › DSE › DSE 2019 › Q35
0 marksEconometrics › Linear regression and OLS › Interpreting slopes, intercepts and rescalingEasyabout 2 min

DSE 2019 Question 35: 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.

If a homeowner converts a bedroom into a bathroom, what is the expected increase in the value of the house?

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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. If a homeowner converts a bedroom into a bathroom, what is the expected increase in the value of the house? (A) Rs. 23,915 (B) Rs. 21,800 (C) Rs. 22,800 (D) Rs. 22,915

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. If a homeowner converts a bedroom into a bathroom, what is the expected increase in the value of the house?

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

What this question tests

This question is on Interpreting slopes, intercepts and rescaling, part of Linear regression and OLS in Econometrics.

Reading a fitted coefficient, and what changes when variables are rescaled.

TestStop has 12 past-paper questions on this subtopic.

Practise Linear regression and OLSMore on Interpreting slopes, intercepts and rescaling

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