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House size and number of bedrooms on the house price

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Reference no: EM131996439

In the following regression model:

ln(HousePrice)=β1+β2Size+β3Bedrooms+u we study the effect of house size and number of bedrooms on the house price. 

Based on this regression, how do we assess the effect of the characteristics of the house (both size and number of bedrooms) on the sale price of the house at the 10% significance level?

A. Use a t-test for H0 :  β2 = 0 against H0 :  β2 ≠ 0    at the 10% significance level, and use a t-test for H0 :  β3 = 0 against  H0 :  β3 ≠ 0 at the 10% level. Reject if at least one of the t-tests rejects.

B. None of the stated options is correct.

C. Use a t-test for  H0 :  β2 = 0 against H0 :  β2 ≠ 0   at 5% level, and use a t-test for H0 :  β3 = 0   against H0 :  β3 ≠0   at 5% level. Reject if at least one of the t-tests rejects.

D. Use a F-test for the overall significance of the regressors at the 10% significance level.

Reference no: EM131996439

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