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ECMT - Assignment Example

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The dummy variables included here are indicators for whether there is central air conditioning or not, whether there is private access to waterfront or not and two dummies reflecting whether the distance to coast is within 1 KM or between 1 and 5 KM. Since all these could…
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ECMT Assignment
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Download file to see previous pages From table 1 we find that the computed t-statistic is 0.275, and the p-value is 0.78. Recall that the critical t-value at the 5% level is 1.96. Therefore, we fail to reject the null hypothesis. Thus, we fail to reject that the coefficient of D2 is statistically significantly not different from zero.
Yes, there is evidence to support that inclusion of central air conditioning leads to higher prices. This is evident from the fact that the estimated coefficient on the variable “central air” is positive and significant.
The dummy variables for coastal proximity are D1 and D2. If the coefficients of these turn out to be significantly different from zero, we can conclude that coastal proximity does indeed lead to differences in prices. We have already tested for significance of the coefficient on D2 in part (e). Using the same methodology of a t-test of = 0 against the alternative of 0, we find that the calculated t-value is 1.714 which is significant only at the 10% level but not at the 5% level (p-value = 0.09). Thus we conclude the coefficient is statistically insignificant as well at the 5% level.
Thus, since neither coefficient turns out to be significant, we conclude that we do not have any evidence to suggest that proximity to coast makes any differences to the prices with 95% or higher ...Download file to see next pagesRead More
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