Question 1

Briefly explain after you decide if the statement is True or False. Stating only if it is True or False is not enough to get points.

• a. The interpretation of the slope coefficient in the model Yi = β0+β1 ln (Xi)+ ui is as follows: a change in X by one unit is associated with a β1 change in Y.

• b. TodecidewhetherYi =β0+β1X+ui orln(Yi)=β0+β1X+ui fitsthe 2 data better, you should not consult the regression R .

• c.  E (Y | X1,...,Xk) = Pr(Y = 1 | X1,...,Xk) means that: the exponential of Y is the same as the probability of Y happening.

● d. The LPM model always forces the predicted values to lie between 0 and 1

● e. Probit coefficients are typically estimated using the method of maximum likelihood.

Data