Problem: We are interested in investigating whether taxes influenced by the student population in college town: Let rent be the average monthly rent paid on rental units in college town in the United States. Let pop denote the total city population, avginc the average city income, and pctstu the student population as a percentage of the total population. One model to test for the relationship is:
In(rent) = Bo + B1 In(pop) + B2 In(avginc) + B3 pctstu
What signs do you expect for B1 and B2? Why? Justify your rationale: (20 points)
State the null hypothesis that the size of the student body relative to the population has no effect on monthly rents. State the alternative that there is a positive effect, no ceteris paribus (10 points)