Suppose you run a single linear regression of Wealth = BO+B1 Density + u, where 'Wealth' is scaled in terms of $100,000 (1=$100,000) and 'Density' is scaled in terms of 10,000 people per square kilometre (1=10,000 people/square km). If you obtained an OLS estimate of B1 of 1.95, which of the following would be a correct interpretation? O Increasing Density by 1000 people per square kilometer is associated with a $195,000 increase in Wealth O Increasing Density by 50,000 people per square kilometer is associated with a $97,500 increase in Wealth Increasing Density by 2,500 people per square kilometer is associated with a $48,750 increase in Wealth Increasing Density by 16,000 people per square kilometer is associated with a $300,000 increase in Wealth

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Question 3
Suppose you run a single linear regression of Wealth = BO + B1 Density + u, where 'Wealth' is scaled
in terms of $100,000 (1=$100,000) and 'Density' is scaled in terms of 10,000 people per square
kilometre (1=10,000 people/square km). If you obtained an OLS estimate of B1 of 1.95, which of the
following would be a correct interpretation?
Increasing Density by 1000 people per square kilometer is associated with a $195,000 increase in Wealth
Increasing Density by 50,000 people per square kilometer is associated with a $97,500 increase in Wealth
Increasing Density by 2,500 people per square kilometer is associated with a $48,750 increase in Wealth
O Increasing Density by 16,000 people per square kilometer is associated with a $300,000 increase in Wealth
Transcribed Image Text:Question 3 Suppose you run a single linear regression of Wealth = BO + B1 Density + u, where 'Wealth' is scaled in terms of $100,000 (1=$100,000) and 'Density' is scaled in terms of 10,000 people per square kilometre (1=10,000 people/square km). If you obtained an OLS estimate of B1 of 1.95, which of the following would be a correct interpretation? Increasing Density by 1000 people per square kilometer is associated with a $195,000 increase in Wealth Increasing Density by 50,000 people per square kilometer is associated with a $97,500 increase in Wealth Increasing Density by 2,500 people per square kilometer is associated with a $48,750 increase in Wealth O Increasing Density by 16,000 people per square kilometer is associated with a $300,000 increase in Wealth
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