Exercise 1

Exercise 1 - University of California Department of Economics D Steigerwald Economics 140A Exercise 1 1 You are interested in purchasing a home in

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
University of California D. Steigerwald Department of Economics Economics 140A Exercise 1 1. You are interested in purchasing a home in Santa Barbara. To determine if it is a good time to buy, you collect the selling prices of all homes in the city over the past three years, giving you 497 observations. Let us denote observation t as P t , t=1,. ..,497 . a) We assume that 497 1 } { t t P is a sequence of independent and identically distributed random variables. Construct an estimator of the mean and median of P t . b) Are your estimators unbiased? What is the variance of each estimator? c) Suppose that you grouped the sales according to years, so you could estimate the mean and median sale price of a home in each of the three years. Suppose further, that our assumption that 497 1 } { t t P is an i.i.d. sequence is erroneous. In fact, there are two types of homes, call them nice with mean price N and average with mean price A , where A N . If the composition of sales over time has shifted toward nice homes, which estimator would shift more over time? Carefully explain your logic.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 09/04/2011 for the course ECON 140a taught by Professor Staff during the Fall '08 term at UCSB.

Page1 / 3

Exercise 1 - University of California Department of Economics D Steigerwald Economics 140A Exercise 1 1 You are interested in purchasing a home in

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online