Question: Exercise 2: The following equation (model 1) was estimated using 88 observations:

where price is house price (in thousands of dollars), lotsize is size of lot (in feet), sqrft is square footage, and bdrms is number of bedrooms.

(i) Interpret the coefficient on log (lotsize).

The following equation (model 2) was estimated using 88 observations (the same data as the model 1):

(ii) Interpret the coefficient on lotsize.

(iii) For explaining variation in price, decide whether you prefer the model (1) or (2)? Why?