# 23 - As the size of the house increases, the spread of...

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Chapter 2, Exercise Solutions, Principles of Econometrics, 3e 23 Exercise 2.12(d) (continued) (d) -100,000 -50,000 0 50,000 100,000 150,000 200,000 250,000 0 1,000 2,000 3,000 4,000 5,000 SQFT RESID Figure xr2.12(d) Residuals against square feet for vacant houses The magnitude of the residuals tends to be larger for larger-sized houses suggesting that SR3 () 2 var | i ex [the homoskedasticity assumption of the model] could be violated.
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Unformatted text preview: As the size of the house increases, the spread of distribution of residuals increases, indicating that there is not a constant variance of the error term with respect to house size. (e) Using the model estimated in part (b), the predicted price when 2000 SQFT = is n 18,386 81.389 2000 \$144,392 PRICE = − + × =...
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## This note was uploaded on 11/23/2011 for the course ECON MPBE taught by Professor Jansveceny during the Spring '11 term at Metropolitní Univerzita Praha.

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