Adding room results in lower property value?

[sofieg]

Hi :)

I am working on a assignment in econometrics. The regression analysis is about median property price in a district. Among other variables, it shows the effect that average rooms per house has on the median property price. The coefficient to room is -0.9753. Room^2 is also included, but this has an positive effect on property value with a coefficient of 0.085.

I suppose that adding a room can have negative effect on property value if the flat area doesn't get bigger. But a decrease in price by 97% is a lot! Can someone tell med why?

How do I interpret the Room^2 variable compared to the Room variable?

[startz]

Take the derivative of your estimated equation with respect to room. That's the point of the assignment.