View the step-by-step solution to:

# 1. Suppose we wish to know the effects of pollution and crime rates on housing prices, and plan to run the following regression using OLS:

Here is the question, is you have any further concern, just let me know.

1. Suppose we wish to know the effects of pollution and crime rates on housing prices, and plan to run the following regression using OLS:
(W)=BO+BI10g(n0x,)+[32r00msi+[33(r00ms,)2+64crimei+55roomsi&gt;l&lt;crimei+u ,— Where nox is a measure of nitrogen oxide in the air over the community, rooms is the number of bedrooms in the house, and crime is the reported number of
crimes per capita. a) What is the partial effect of rooms on log(price)? (2) b) Assume B5 =0, ﬁ&lt;0, &amp; [33 &gt;0 graph the relationship between rooms and
log(price). (3)

0) Are there any turning points in the relationship between rooms and log
(price)? If so, algebraically show at what point (rooms) this turning point
occurs. (2) (1) Now suppose B5¢0,&amp; [5320. Interpret the parameter [35 What theoretical
reasons might one have for including the interaction term rooms*crime?(4)

### Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.

### -

Educational Resources
• ### -

Study Documents

Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

Browse Documents