4. Examine the regression table below before answering the questions that follow.Throughout, the Log() function represents the natural logarithm, so that Log(e) =1:Dependent Variable: Log(Expenditures on Cigarettes + 1)Method: Least SquaresVariable Coefficient Std. ErrorConstant 0.50 0.41Log(Income+1) −0.02 0.002(a) Why are the dependent and explanatory variables in the form log(1+x), ratherthan log(x)? (b) Which of the above coefficients are statistically significant? How do you know?(c) Interpret the coefficient on Log(Income+1). (d) What is the predicted level of Log(Expenditures on Cigarettes + 1) for anobserved individual with income of e10 − 1? (4
4. Examine the regression table below before answering the questions that follow.Throughout, the Log() function represents the natural logarithm, so that Log(e) =1:Dependent Variable: Log(Expenditures on Cigarettes + 1)Method: Least SquaresVariable Coefficient Std. ErrorConstant 0.50 0.41Log(Income+1) −0.02 0.002(a) Why are the dependent and explanatory variables in the form log(1+x), ratherthan log(x)? (b) Which of the above coefficients are statistically significant? How do you know?(c) Interpret the coefficient on Log(Income+1). (d) What is the predicted level of Log(Expenditures on Cigarettes + 1) for anobserved individual with income of e10 − 1? (4
Chapter1: Introducing The Economic Way Of Thinking
Section1.A: Applying Graphics To Economics
Problem 1SQ
Related questions
Question
4. Examine the regression table below before answering the questions that follow.
Throughout, the Log() function represents the natural logarithm, so that Log(e) =
1:
Dependent Variable: Log(Expenditures on Cigarettes + 1)
Method: Least Squares
Variable Coefficient Std. Error
Constant 0.50 0.41
Log(Income+1) −0.02 0.002
(a) Why are the dependent and explanatory variables in the form log(1+x), rather
than log(x)?
(b) Which of the above coefficients are statistically significant? How do you know?
(c) Interpret the coefficient on Log(Income+1).
(d) What is the predicted level of Log(Expenditures on Cigarettes + 1) for an
observed individual with income of e
10 − 1? (4
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps with 3 images
Recommended textbooks for you
Managerial Economics: Applications, Strategies an…
Economics
ISBN:
9781305506381
Author:
James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:
Cengage Learning
