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.
