The Estimated Logit Regression in Your Textbook Is $\widehat{\operatorname { Pr } ( \text { deny } = 1 \mid \text { P/Iratio,black } )}$

question 47

Essay

The estimated logit regression in your textbook is $\widehat{\operatorname { Pr } ( \text { deny } = 1 \mid \text { P/Iratio,black } )}$ = F(-4.13 + 5.37 P/Iratio + 1.27 black)
Is there a meaningful interpretation to the slope for the P/I Ratio? Calculate the increase of a rejection probability for both blacks and whites as the P/I Ratio increases from 0.1 to 0.2. Repeat the exercise for an increase from 0.65 to 0.75. Why is the increase in the probability higher for blacks at the smaller value of the P/I Ratio but higher for whites at the larger P/I Ratio?

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Definitions:

ATC

Stands for Average Total Cost, which is the cost per unit of output, calculated by dividing the total cost by the quantity produced.

Average Total Cost

The sum of all production costs divided by the quantity of output produced, synonymous with the cost per unit including all variable and fixed costs.

Long-run Equilibrium

A state in which all factors of production and costs are variable, and firms in the industry make just enough profit to stay in business.

Short-run Profits

Short-run profits occur when a company's revenue exceeds its operating costs within a particular, relatively brief period.