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20 July, 13:48

You ran a regression of income (y) on years of education (x). Income is measured in thousands of US$. Because of heteroscedasticity, you transformed your dependent variable. Your regression line is now: predicted ln (income) = 2.4 + 0.06 x education What is the predicted income for a person who has 9 years of education? A. $12,940

B. $ 18,916

C. $ 29,400

D. $ 2,940

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  1. 20 July, 16:23
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    D. $2940

    Step-by-step explanation:

    The given regression model is

    Income=2.4+0.06 x education.

    The predicted income of person with 9 years of education can be computed by replacing education year with 9 in the regression model

    Income=2.4+0.06*9

    Income=2.4+0.54

    Income=2.94

    As the income is measured in thousands of US $ so,

    Income=2.94*1000 $

    Income=$2940.

    Thus, the predicted income of person with 9 years of education is $2940.
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