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You wish to predict the sale price of single-family residences in Massachusetts. You collect price and property features data on each property sold in the state for the years 2008 - 2014.
Pricei = β0 + β1*lotsizei + β2*houseagei + β3*bedroomsi + β4*bathroomsi + µi
Where:
lotsize = size of the house (in square feet)
houseage = age of the house (in years)
bedrooms = number of bedrooms in the house
bathrooms = number of bathrooms in the house
After running the regression, you discover that both bedrooms and bathrooms are statistically insignificant at the α = .1 level. What problem might there be with your equation that could explain this occurring? How could you fix this problem and how else could you test for the statistical significance of bedrooms and bathrooms?
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