Question

The following table provides different statistical model specifications along with the elasticity of yt with respect to xt. Which one of the following options is correct ?Row	Statistical Model	Elasticity
1	$y_t=β_1+β_2\frac{1}{x_t}\epsilon_t$	$-\frac{β_2}{x^2_t}$
2	$y_t=β_1-β_2\text{ln}(x_t)+\epsilon_t$	$-\frac{β_2}{x^2_t}$
3	ln(yt) = β1 + β2 ln(xt) + εt	β2
4	ln(yt) = β1 + β2xt + εt	β2xt
5	ln(yt) = β1 + β2 ln(xt) + εt	β2 exp(xt)
6	ln(yt) = β1 + β2xt + εt	$β_2\frac{1}{\text{exp}(x_t)}$

• A. Only rows 3 and 4 are correct
• B. Only rows 1 and 2 are correct
• C. Only rows 3 and 5 are correct
• D. Only rows 4 and 6 are correct

Answer 1

Answer: (A)

Only rows 3 and 4 are correct

Answer 2

The correct option is (A) : Only rows 3 and 4 are correct.