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Question: note i will be going over the answers in class...

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Note: I will be going over the answers in class on January 24th. As such, late assignments will not be accepted. Assume you are interested in housing prices. You believe that the number of bedrooms will mpact the price of a home. Let bedroomi represent the number of bedrooms in home, and price, its price (in dollars). In this case the unit of observation is the home a) Write the population model of interest. b) Name two factors not accounted by the model that could affect the price a home, i.e. two factors that are in the error term. Briefly explain why you believe these factors would affect your dependent variable. b) Assume the following random sample from the Toronto housing market { (bedroom, price.) : İ-: 1, . . . , 4)) {(3, 50(XX)()), (2, 30()(00), (7, 100XX)(0), (4, 6(XX)(0)) Using the OLS estimator, calculate estimates of the intercept and the slope parameter. You are to do it by hand and show your work d) Interpret the estimate of interest e) Graph (to scale) the sample points, and the estimated line. Put the number of bedrooms on the horizontal axis and the price on the vertical axis.
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