Business, 24.05.2021 21:10 la200564

The following equation describes the median housing price in a community in terms of amount of pollution (nox for nitrous oxide) and the average number of rooms in houses in the community (rooms): log(price) = B0 + B1 * log (nox) + B2 *rooms + u
(i) What are the probable signs of b1 and b2 ? What is the interpretation of b1 ? Explain.
(ii) Why might nox [or more precisely, log(nox)] and rooms be negatively correlated? If this is the case, does the simple regression of log(price) on log(nox) produce an up- ward or a downward biased estimator of b1 ?

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The following equation describes the median housing price in a community in terms of amount of pollu...

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