Consider the following least squares specification between testscores and the student-teacher ratio: = 557.8 + 36.42 ln (Income).According to this equation,a 1% increase income is associated with an increase in test scores of
A)0.36 points
B)36.42 points
C)557.8 points
D)cannot be determined from the information given here

Question

Consider the following least squares specification between testscores and the student-teacher ratio:  = 557.8 + 36.42 ln (Income).According to this equation,a 1% increase income is associated with an increase in test scores of
A)0.36 points 
B)36.42 points 
C)557.8 points 
D)cannot be determined from the information given here

Quizplus · Accepted Answer

The equation shows that the coefficient for ln(Income) is 36.42. This means that a 1% increase in Income is associated with an increase in test scores by 36.42 * 0.01 = 0.3642 points. Therefore, the correct answer is A) 0.36 points.

Consider the Following Least Squares Specification Between Testscores and the Student-Teacher