1. Estimate regression.

Dependent Variable: PRICE Method: Least Squares Date: 06/05/12 Time: 01:28 Sample: 1 88 Included observations: 88 Variable C ROOMS SQFEET R-squared Adjusted R-squared S.E. of regression Sum squared resid Log likelihood F-statistic Prob(F-statistic) Coefficient -19315.00 15198.19 128.4362 0.631918 0.623258 63044.84 3.38E+11 -1095.881 72.96353 0.000000 Std. Error 31046.62 9483.517 13.82446 t-Statistic -0.622129 1.602590 9.290506 Prob. 0.5355 0.1127 0.0000 293546.0 102713.4 24.97458 25.05903 25.00860 1.757956

Mean dependent var S.D. dependent var Akaike info criterion Schwarz criterion Hannan-Quinn criter. Durbin-Watson stat

2. Obtain residuals of the regression(we name it ut) Genr ut= resid And square residuals by Genr utsq=ut^2

3. estimate auxiliary regression using dependent variables as utsq and rooms, sqfeet as independent variables
Dependent Variable: UTSQ Method: Least Squares Date: 06/05/12 Time: 01:42 Sample: 1 88 Included observations: 88 Variable C ROOMS SQFEET R-squared Adjusted R-squared S.E. of regression Sum squared resid Log likelihood Coefficient -8.22E+09 1.19E+09 3881720. 0.120185 0.099484 7.93E+09 5.35E+21 -2129.248 Std. Error 3.91E+09 1.19E+09 1739736. t-Statistic -2.103344 0.995771 2.231213 Prob. 0.0384 0.3222 0.0283 3.84E+09 8.36E+09 48.46019 48.54464 48.49421

Mean dependent var S.D. dependent var Akaike info criterion Schwarz criterion Hannan-Quinn criter.

F-statistic Prob(F-statistic)

5.805633 0.004331

Durbin-Watson stat

1.649127

4. Now compute Lagrange Multiplier (LM) LM= nR square 88 x .120 = 10.56 It is distributed under chi square distribution. With (k-1) DF . Here DF = 2. genr chi=@qchisq(.95,2) = 5.991465 5. Calculated LM stat > chi square critical value. Rejecting null hypothesis , therefore heteroskedasticity exists.