Question

(3) If the functional form of g(Yi) is g(Yi)=In(Yi), and the functional form of f(Pi) is f(Pi)- In(Pi), then interpret the meaning of the estimated coefficient of f(Pi). (4) If the functional form of g(Yi) is g(Yi)-In(Yi), and the functional form of f(Pi) is (Pi)-Pi, then interpret the meaning of the estimated coefficient of f(Pi)

Answer 1

ANS

1.If the function form of g
(yi)
is g
(yi)
=yi and the function form of f
p
is f
p
=
pi
,then the estimated coefficient of
f (pi
means that an increase in pi by 1% leads to a fall in by 0.453% ( fall because the sign is negative and thus pi and yi are inversely related)

2.If the function form of g
(yi)
is g
(yi)
=yi and the function form of f
f (pi
=in
p
,then the estimated coefficient of
fpi
means that an increase in pi by 1% the different in the expected mean of
yi
falls by 0.453 (fall because the sing is negative and thus Pi and Yi are inversely related)