Consider the following least squares specification between testscores and the student-teacher ratio: $\widehat{\text { TestScore }}$ = 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

Quizplus · Accepted Answer

Given the equation, a 1% increase in income (since income is in a logarithmic form) is associated with a 0.01 * 36.42 = 0.3642 ≈ 0.36 points increase in test scores.

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