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# 21 - additional square foot in size The intercept if taken...

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Chapter 2, Exercise Solutions, Principles of Econometrics, 3e 21 EXERCISE 2.12 (a) We can see a positive relationship between price and house size. 0 100000 200000 300000 400000 500000 600000 0 1000 2000 3000 4000 5000 SQFT PRICE Figure xr2.12(a) Price against square feet (b) The estimated equation for all houses in the sample is n 18,386 81.389 PRICE SQFT =− + The coefficient 81.389 suggests house price increases by approximately \$81 for each
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Unformatted text preview: additional square foot in size. The intercept, if taken literally, suggests a house with zero square feet would cost − \$18,386, a meaningless value. The model should not be accepted as a serious one in the region of zero square feet. 100,000 200,000 300,000 400,000 500,000 600,000 1,000 2,000 3,000 4,000 5,000 SQFT Figure xr2.12(b) Fitted regression line...
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