From a local municipal records, information are gathered about the house prices and the square footages. You are interested in exploring a possible relationship between house pricing and the area occupied by the house.

a. Write down a model (not an estimated equation) that implies percentage changes (or relative changes) in house price due to relative changes (or percentagel) to the area. Indicate which parameter measures the relative change in house price. A random sample of 321 houses provided the following information summaries: = ln (price) = ln(area) = 3652.376 = 2438.712 = 41618.6 = 18564.61 = 27779.28 = 321

b. Use the summarized data provided above to estimate the model: ln(price) = + ln(area) + , where: price is the house price, and area is the square footage of the house.

c. Explain in words what the estimated equation in b. represents. Provide an interpretation for each coefficient estimate from b.

d. Calculate the estimated effect on a house price of a 5% additional square feet to the area. (1pt). e. Calculate the standard error for each coefficient estimate

f. Calculate the coefficient of determination R-Squared, and provide an interpretation for it.

g. With a 5% significance level, is there a significant evidence that more square footage significantly increase the house price? (state clearly what are the relevant null and alternative hypotheses, and explain also what are the implications you draw from your conclusion).

h. Provide a 95% interval estimate for the slope and for the intercept coefficients.