Quiz #3 Review

Question 1

how to find elasticity for a simple regression (P and Q)

Answer 1

estimated coefficient x (P/Q) = elasticity at that point

-so, choose a P, calculate Q according to regression equation…caclulate elasticity

Question 2

elasticity along a linear demand curve changes or doesn’t change?

Answer 2

it changes, dependong on where you are on the curve

Question 3

how do you estimate a curvilinear regression in STATA?

Answer 3

convert all data to natural logs

-run regression exactly the same

Question 4

formula for a demand function that is downward sloping and curvilinear

Answer 4

Qd = a(P^b)

Question 5

log-log

Answer 5

taking the log of both variables (DV and IVs) changes the interpretation to percentages
-a certain percent change in X is associated with a certain percentage change in Y

Question 6

log-log and their beta and curves

Answer 6

if it starts toward the origin and is convex, Beta will be greater than 1

if if starts at the origin and is concave down, beta will be between 0 and 1

if it starts higher than the origin and is convex, beta will be less than zero

Question 7

log linear

Answer 7

conversion of DV to logs

• leave IV as they are
• changes to the DV are interepreted as percentages, not units

Question 8

ex: ln(sellingPrice) = 6.21-.08x(age)

interpret

Answer 8

a one year increase in the age of the house translates to an 8% increase in the decrease in the selling price of the house

-because DV is log, we must multiply the coefficient by 100 to interpret impact

Question 9

linear log

Answer 9

convert the IV(s) to logs, leave the DV as it is

-changes in the IV are now interepreted as percentages, not units

Question 10

ex: number of dining out experiences = -37.9 + 11.33*(LnIncome)
interpret!

Answer 10

a 9% increase in income translates to (9*.11 or .99) about a 1 time increase in dining out per month

-must divide the coefficient by 100 to translate impact