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[Solution] Using data from 1988 for houses sold in Andover, Massachusetts, from Kiel and McClain (1995), the following equation relates housing price (price)

Question: Using data from 1988 for houses sold in Andover, Massachusetts, from Kiel and McClain (1995), the following equation relates housing price (price) to the distance from a recently built garbage incinerator (dist):

\[\begin{matrix} \widehat{\log price}=9.40+0.312\log (\text{ dist }) \\ n=135,{{R}^{2}}=0.162 \\ \end{matrix}\]
  1. Interpret the coefficient on \(\log(dist)\). Is the sign of this estimate what you expect it to be?
  2. Do you than: simple regression provides an unbiased estimator of the ceteris pains elasticity of price with respect to dist? (Think about the city’s decision on where to put the incinerator.) -
  3. What ether factors about a house affect its price? Might these be correlated with distance flora the incinerator?

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