Here we want to test whether the assessed housing price (assess below) is a rational prediction for the actual housing price (price below) using variables

price = house price
assess = the assessed housing value (before the house was sold)

Consider a simple regression model price = β1 + β2assess + ε, the assessment is rational if β1 = 0 and β2 = 1. The estimated equation and other related information are given by

price = −14.47 + 0.976 assess

(16.27) (0.049)

n = 88, RSS = 165,644, R2 = 0.82
where the numbers in the parentheses are standard errors. Assume that Classical Assumptions for

SLRM (Simple Linear Regression Model) hold. Do the following questions.

(a) From the estimation results predict a housing price when its assessed value equals $240,000.

(b) From R2 and Residual Sum of Squares (RSS) calculate the Explained Sum of Squares (ESS).

(c) Test the hypothesis that H0 : β1 = 0 against the two-sided alternative.