Question

9) Suppose that you are tasked with reporting the price for \"rent of primary residence\" . In past years, you have reported the rent of a 1,000 square foot apartment without an attached garage (the norm for the past several years) at $1,250 per month. Now, you find that the new norm is a 1,300 square foot apartment with an attached garage. You run the following regression to gauge the impact of square footage and the garage on price: $\ln(rent) = 6.38 + .70(sqft) + .10(garage)$ Where RENT is the monthly rent, SQFT is the square footage of the apartment in thousands and GARAGE is a dummy variable equal to 1 if the apartment has a garage and 0 If it doesn't. You find that the monthly rent for a 1,300 square foot apartment with a garage is $1,600. a) Calculate the inflation rate for the rent. b) Calculate the hedonically adjusted inflation rate for the rent.

          9) Suppose that you are tasked with reporting the price for \"rent of primary residence\" . In past
years, you have reported the rent of a 1,000 square foot apartment without an attached
garage (the norm for the past several years) at $1,250 per month. Now, you find that the
new norm is a 1,300 square foot apartment with an attached garage. You run the following
regression to gauge the impact of square footage and the garage on price:
$\ln(rent) = 6.38 + .70(sqft) + .10(garage)$
Where RENT is the monthly rent, SQFT is the square footage of the apartment in thousands
and GARAGE is a dummy variable equal to 1 if the apartment has a garage and 0 If it
doesn't.
You find that the monthly rent for a 1,300 square foot apartment with a garage is $1,600.
a) Calculate the inflation rate for the rent.
b) Calculate the hedonically adjusted inflation rate for the rent.

9) Suppose that you are tasked with reporting the price for r̈ent of primary residence.̈ In past
years, you have reported the rent of a 1,000 square foot apartment without an attached
garage (the norm for the past several years) at 1,250 per month. Now, you find that the
new norm is a 1,300 square foot apartment with an attached garage. You run the following
regression to gauge the impact of square footage and the garage on price:ln(rent) = 6.38 + .70(sqft) + .10(garage)Where RENT is the monthly rent, SQFT is the square footage of the apartment in thousands
and GARAGE is a dummy variable equal to 1 if the apartment has a garage and 0 If it
doesn't.
You find that the monthly rent for a 1,300 square foot apartment with a garage is1,600.
a) Calculate the inflation rate for the rent.
b) Calculate the hedonically adjusted inflation rate for the rent.

Added by Manuel G.

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