Empirical Research Methods for Business Assignment
In this assignment, we will revisit the "Melbourne Property Prices" dataset considered in Assignment 1 and described at the end of this assignment (p. 3). Before beginning the assignment, read through the description of this dataset and its variables carefully. The Melbourne Property Prices" dataset can be found in the file "PropertyPrices.sav."
1. First, we will consider the task of predicting property price (PRICE) from the distance between the property suburb and the Melbourne central business district (DISTANCE) using simple linear regression.
(a) State the assumptions of
- linearity,
- normality, and
- homoscedasticity/equal variances
that underlie linear regression.
(b) Using appropriate graphical displays, thoroughly assess these assumptions for a linear regression of property price on distance between the property suburb and the Melbourne central business district.
(c) Assuming that the assumptions of linear regression hold (regardless of your conclusion from part (b)), is there a significant relationship between property price and the distance between the property suburb and the Melbourne central business district? If so, interpret the slope term (i.e., β1). Additionally, interpret the value of R2.
(d) Present the estimated regression equation relating property price to the distance between the property suburb and the Melbourne central business district, and use it to predict the property price for a suburb that is 15 kilometers from the central business district.
2. Now, we will consider the task of predicting property price (PRICE) from the distance between the property suburb and the Melbourne central business district (DISTANCE), number of rooms (ROOMS), and building size (BUILDING AREA).
(a) Using appropriate graphical displays, thoroughly assess the assumptions of linear regression for a linear regression of property price on distance between the property suburb and the Melbourne central business district, number of rooms, and building size. Additionally, be sure to assess multicollinearity for the independent variables.
(b) Assuming that the assumptions of linear regression hold (regardless of your conclusion from part (a)), which of these independent variables are significantly associated with property price? For each variable that is significantly associated with property price, interpret the slope term. Additionally, interpret the value of R2.
(c) Is property price significantly associated with number of rooms and building size after adjusting for the distance between the property suburb and the Melbourne central business district? Use an appropriate analysis to address this. (You are not expected to check assumptions.)
3. Presentation marks. These marks are allocated based on:
- structure, clarity, and tidiness of presented solutions/answers; and
- correctness in spelling and grammar.
Attachment:- Assignment Files.rar