Assume you run regression where you explain vineyard land profits as a function of temperature, rainfall and a time trend. The table below reports the results of two different models. The dependent variable is the natural logarithm of profits.a) Which of the two equations do you prefer? Why? b) Refer to Equation 1 and calculate the average trend-induced inflation rate of nominal profits. c) Refer to Equation 1 and calculate the profit-maximizing temperature.

Equation 1 Equation 2 In(profit) Temperature In(profit) 0.190** 0.302 (in degree Celsius) (2.32) (Temperature)2 (0.99) -0.0045* (in degree Celsius) (-2.09) Rainfall Harvest -0.335 -0.455 (in milliliters) (-1.49) (-1.54) Trend 0.019*** 0.022** (6.66 (2.36) R2 0.88 0.80 T-statistics in parentheses; Significance levels 1% * * * '), 2% (* *), 5% (*)