6 Question A2The following equation reports a regression of the natural logarithm of the housing prices (Iprice, where price is in $1000) on age of ahouse (age), number of room in a house (room), and the natural logarithm of the distance from a house to the city centre (ldistance):Iprice = 9.215 – 0.025age + 0.036room – 0.195ldistanceIf all the Gauss-Markov assumptions hold, then the OLS estimation of the above equation shows that on averageSelect one:a.a one percent increase in distance decreases housing price by about 19.5% for houses with the same values of (age, room)a one unit increase in distance decreases housing price by about $195 (= 0.195 * 1000) for houses with the same values of(age, room)b.an increase of one room increases housing price by about 0.036% for houses with the same values of (age, distance)с.d.an increase of one room increases housing price by about 3.6% for houses with the same values of (age, distance)Question A3 9The following model investigates the effect of a worker training program on their productivity,avgprod = av + ¤¡avgtrain + uwhere avgprod is productivity per worker at a manufacturing firm and avgtrain is the hours of training per worker at the firm. If u iscorrelated with avgtrain and u is correlated with avgprod, the OLS estimate of aj will beSelect one:a.biased and consistentb. unbiased and inconsistentC.biased and inconsistentd. unbiased and consistent

A2. The correct answer is option a. A one percent increase in distance decreases the housing price…

(age), number of room in a house (room), and the natural logarithm of the distance from a house to the city centre (Idi stance Iprice = 9.215 – 0.025age + 0.036room – 0.195ldistance e Gauss-Markov assumptions hold, then the OLS estimation of the above equation shows that on average one: a one percent increase in distance decreases housing price by about 19.5% for houses with the same values of (age, room a one unit increase in distance decreases housing price by about $195 (= 0.195 * 1000) for houses with the same values o (age, room) an increase of one room increases housing price by about 0.036% for houses with the same values of (age, distance) an increase of one room increases housing price by about 3.6% for houses with the same values of (age, distance) on A3 f9 lowing model investigates the effect of a worker training program on their productivity, avgprod = ao + a¡ avgtrain + u avgprod is productivity per worker at a manufacturing firm and avgtrain is the hours of training per worker at the firm. If u is ted with avgtrain and u is correlated with avgprod, the OLS estimate of a1 will be one: biased and consistent unbiased and inconsistent biased and inconsistent unbiased and consistent

(age), number of room in a house (room), and the natural logarithm of the distance from a house to the city centre (Idi stance Iprice = 9.215 – 0.025age + 0.036room – 0.195ldistance e Gauss-Markov assumptions hold, then the OLS estimation of the above equation shows that on average one: a one percent increase in distance decreases housing price by about 19.5% for houses with the same values of (age, room a one unit increase in distance decreases housing price by about $195 (= 0.195 * 1000) for houses with the same values o (age, room) an increase of one room increases housing price by about 0.036% for houses with the same values of (age, distance) an increase of one room increases housing price by about 3.6% for houses with the same values of (age, distance) on A3 f9 lowing model investigates the effect of a worker training program on their productivity, avgprod = ao + a¡ avgtrain + u avgprod is productivity per worker at a manufacturing firm and avgtrain is the hours of training per worker at the firm. If u is ted with avgtrain and u is correlated with avgprod, the OLS estimate of a1 will be one: biased and consistent unbiased and inconsistent biased and inconsistent unbiased and consistent

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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