Chapter 2, Exercise Solutions, Principles of Econometrics, 3e15Exercise 2.9 (continued) (b) The least squares estimates are b1= 6.0191 b2= −0.3857 Since ln(UNITCOST1) = β1, an estimate of u1is n() ( )11expexp 6.0191411.208UNITCOSTb===This result suggests that 411.2 was the cost of producing the first unit. The estimate b2= −0.3857 suggests that a 1% increase in cumulative production will decrease costs by 0.386%. The numbers seem sensible. 184.108.40.206.03.13.23.33.4
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