Assume That You Had Estimated the Following Quadratic Regression Model $\widehat{\text { TestScore }}$

question 46

Multiple Choice

Assume that you had estimated the following quadratic regression model $\widehat{\text { TestScore }}$ = 607.3 + 3.85 Income - 0.0423 Income². If income increased from 10 to 11 ($10,000 to $11,000) , then the predicted effect on testscores would be

• A)3.85
• B)3.85-0.0423
• C)Cannot be calculated because the function is non-linear
• D)2.96

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Definitions:

Wealth

The accumulation of valuable resources and possessions, which can include money, properties, and investments.

Risk Averse

The characteristic of preferring to avoid risk, where an individual or entity would choose a certain outcome over a gamble with a potentially higher, but uncertain, payoff.

Utility Function

A mathematical representation of how a series of choices provides a level of satisfaction to an individual.

Utility Function

A mathematical representation describing how individuals rank different bundles of goods based on the level of satisfaction or utility they provide.