Chapter 2, Exercise Solutions, Principles of Econometrics, 3e22Exercise 2.12 (continued) (c) The estimated equation when a house is vacant at the time of sale is n4792.7069.908PRICESQFT=−+For houses that are occupied it is n27,169 89.259PRICESQFT+These results suggest that price increases by $69.91 for each additional square foot in size for vacant houses and by $89.26 for each additional square foot of house size for houses that are occupied. Also, the two estimated lines will cross such that vacant houses will have a lower price than occupied houses when the house size is large, and occupied houses
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