THE NEXT QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION

question 189

Multiple Choice

THE NEXT QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION:
In examining the determinants of income,data were collected regarding the characteristics of 45 adults,and the regression lnY = β₀ + β₁ lnX₁ + β₂ lnX₂ + β₃X₃ + ε was used,where Y is the annual income (in thousands of dollars) ,X₁ is the adult's age,X₂ is his/her years of education,and X₃ is a dummy
variable = 1 and is used if the adult is female.You run the regression and obtain the equation
ln
= 6.3 + 0.91 lnx₁ + 1.3 ln x₂ - 0.05x₃.
-How would you interpret the coefficient on years of education?

• A)For every addition in his/her years of education,we would expect the income to increase on average by $1,310,assuming that all the other independent variables in the model are held constant.
• B)For every one percent increase in his/her years of education,we would expect the income to increase on average by 1.3 percent,assuming that all the other independent variables in the model are held constant.
• C)For every 1.3 percent increase in his/her years of education,we would expect the income to increase approximately by $1,000,assuming that all the other independent variables in the model are held constant.
• D)For every one percent increase in his/her years of education,we would expect the income to increase approximately by $1,310,assuming that all the other independent variables in the model are held constant.

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Definitions:

Estrogen

A group of sex hormones predominantly found in women that are crucial for the development and regulation of the female reproductive system and secondary sexual characteristics.

Progesterone

A steroid hormone released by the corpus luteum that prepares the endometrium for pregnancy and supports early gestation.

Sexual Arousal

involves the physiological and psychological response to sexual stimulation, which can vary greatly among individuals.

Breathlessness

A state or sensation of being unable to breathe easily or comfortably, often a symptom of various health conditions.