Econ122A+Sample+Final+Exam+-+Solutions

Let pricegb price measured in gb pounds then pricegb

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Unformatted text preview: d price is recorded in US dollars. What would be your estimate of the slope if price were recorded in GB pounds (assuming 1 GB pound = 2 US dollars) AND you use daily soda consumption rather than weekly soda consumption? a) - 0.02 b) - 0.49 c) - 0.07 d) - 0.01 Answer: C Change in log represents a percentage change, which does not depend on the unit of measurement, so if a variable is in the log form, then unit of measurement does not matter for the slope estimate. Let price_GB = price measured in GB pounds. Then price_GB = price/2 Take the log of both sides: Log(price_GB) = log(price/2) = log(1/2) + log(price) This is the same as adding a constant to the independent variable so the intercept estimate will change, but the slope estimate will not change. Let soda_daily = per capita soda consumption per day. Then so...
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This document was uploaded on 03/11/2014.

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