The following rearession model studies the effect of size of house (Sar ft) and number of bedrooms ( Bdrm.s) on the price of ahouselog(Price) = B0+ B1Srft + B2 Bdrms + UWe can test the null hypothesis that B1 =B2 , by reparameterising the model, where we regress log( Price) on the following twovariables:
Question
The following rearession model studies the effect of size of house (Sar ft) and number of bedrooms ( Bdrm.s) on the price of ahouselog(Price) = B0+ B1Srft + B2 Bdrms + UWe can test the null hypothesis that B1 =B2 , by reparameterising the model, where we regress log( Price) on the following twovariables:
Solution
The text seems to be incomplete. However, to test the null hypothesis that B1 = B2, you can reparameterize the model by creating a new variable. This new variable could be the difference between the size of the house and the number of bedrooms. Then, you would regress log(Price) on this new variable.
Here are the steps:
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Create a new variable, let's call it Diff, which is the difference between Srft and Bdrms. Diff = Srft - Bdrms.
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Run a new regression model where you regress log(Price) on Diff. The new model would be: log(Price) = B0 + B1*Diff + U.
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Test the null hypothesis that the coefficient of Diff (B1) is equal to zero. If B1 is statistically significantly different from zero, then you can reject the null hypothesis that B1 = B2 in the original model.
Please note that this is a simplified explanation and the actual process may require additional steps and considerations depending on the specifics of your data and research question.
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