15 - Chapter 2, Exercise Solutions, Principles of...

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Chapter 2, Exercise Solutions, Principles of Econometrics, 3e 15 Exercise 2.9 (continued) (b) The least squares estimates are b 1 = 6.0191 b 2 = 0.3857 Since ln( UNITCOST 1 ) = β 1 , an estimate of u 1 is n () ( ) 11 exp exp 6.0191 411.208 UNITCOST b == = This result suggests that 411.2 was the cost of producing the first unit. The estimate b 2 = 0.3857 suggests that a 1% increase in cumulative production will decrease costs by 0.386%. The numbers seem sensible. 2.7 2.8 2.9 3.0 3.1 3.2 3.3 3.4
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