Question

The following table provides different statistical model specifications along with the elasticity of y_t with respect to x_t. 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

The Correct Option is A

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