How do you interpret the estimated value of 1 in the following equation: ln(ENT_EXP) = 1 + 2 (INCOME) + e
Where INCOME is annual household income (in thousands) and ENT_EXP is annual entertainment expenses?
A) the income elasticity of entertainment
B) when multiplied by 100 it is the percentage increase in entertainment expenses associated with an additional $1000 in income
C) the increase in entertain expenses associated with a 1% increase in income
D) the average of the logarithm of entertainment expenses for a household with zero income
Correct Answer:
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