In the Model Ln(y) = β₀ + β₁ Ln(x)

question 108

Multiple Choice

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%

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Definitions:

Traditional

Relating to customs, beliefs, or methods that have existed for a long time without significant change, often passed down from generation to generation.

Means-ends Rationality

A decision-making process focused on efficiently achieving a specific goal.

Desired Outcome

The specific result or achievement one aims to accomplish through a particular course of action or strategy.

Value Rationality

A type of decision-making process where actions are chosen based on a consistent system of values, rather than solely on instrumental, goal-oriented reasoning.