Question

Consider the following estimated models:

Model 1:  yˆ = 14 + 7.34x

Model 2:  yˆ= 3.0 + 25 In(x)

Model 3: In(y)ˆ = 2.0 + 0.08x; s_e = 0.06

Model 4: In(y)ˆ= 2.5 + 0.48 In(x); s_e = 0.16

a. Interpret the slope coefficient in each of the above estimated models, when x increases by one unit in Models 1 and 3 and by 1% in Models 2 and 4. (Round your answers to 2 decimal places.)

increase or decrease

Model 1: y^		by		units
Model 2:y^		by about		units
Model 3: y^		by about		percent
Model 4:y^		by about		percent

b. For each model, what is the predicted change in y when x increases by 6%, from 10 to 10.6? (Do not round intermediate calculations. Round final answers to 2 decimal places.)
   increase or decrease

Model 1:y^		by		units
Model 2: y^		by		units
Model 3: y^		by		percent
Model 4: y^		by		percent

Answer 1

a)

Model 1: y^ increases by 7.34 units.

Model 2: y^ increases by about 0.25 units.

Model 3: y^ increases by about 8 percent.

Model 4: y^ increases by about 0.48 percent.

b)

Model 1: y^ increases by 4.404 units. [i.e., 7.34 * 0.6]

Model 2: y^ increases by about 1.5 units. [i.e., 0.25 * 6]

Model 3: y^ increases by about 4.8 percent. [i.e., 8 * 0.6]

Model 4: y^ increases by about 0.288 percent. [i.e., 0.48 * 0.6]