In the model ln(y) = β₀ + β₁ ln(x) + ε, the coefficient β₁ is the approximate ________. A) change in E(y) when x increases by one unit B) percentage change in E(y) when x increases by 1% C) percentage change in E(y) when x increases by one unit D) change in E(y) when x increases by 1%

Question

Quizplus · Accepted Answer

In a log-log model, the coefficient β₁ represents the elasticity, which is the percentage change in the expected value of y (E(y)) for a 1% change in x.

In the Model Ln(y) = β0 + β1 Ln(x)

In the Model Ln(y) = β₀ + β₁ Ln(x)