4. Feasible Generalized Least Squares. Consider the linear regression model price = Bo + B₁lotsize + B₂sqrft + 3bdrms + u, where price is the house price measured in thousands of pounds, lotsize is the size of lot in square feet, sqrft is size of house in square feet, bdrms is the number of bedrooms, and E (u | lotsize, sqrft, bdrms) = 0. An econometrician believes that u² = vexp {0 +1lotsize}, where E (v|lotsize, sqrft, bdrms) = 1. Which assumption(s) of the Gauss-Markov theo- rem are violated? Describe main steps of an asymptotically efficient procedure for estimating Bo, B1, B2, B3.

Fig: 1