Question

Hello, below is the STATA question i am having trouble with. I understand you dont have the dataset, however, is there any help you may please provide? Maybe the commands in STATA needed for this problem? Thank you.

Please download the hprice dataset (housing prices) and answer the following questions:

1. Run a regression where your x variable is age and your y variable is price.

a) What is the null hypothesis? Alternate hypothesis?

b) Do you expect the coefficient on age to be positive or negative? Why?

c) Explain the results of both the constant and the coefficient on age.

d) Explain the R-squared result using plain English.

Answer 1

Q1)

(a) the command for regression is:

reg price age

The null hypothesis is: Ho: coefficient on age = 0

Alternate hypothesis: Ha: coefficient on age 0

(b) The coefficient on age is expected to be negative. This is beacuse older houses (higehr age) would be in a slightly poorer condition as compared to the new houses (lower age) and thus older houses should have a lower price

(c) the coefficient on age tells us the increase in price of house for an increase in age by 1 year. The constant term gives the value of price of house when age is 0

(d) The R-squared (say, for instance value is 0.85) menas that the roughly 85% of the total variation in the house prices is explained by the variation in the age of house or within the regression model specified.