Based on the following data, estimate the model:
(1/Yi) = B1 + B2Xi + ui

a. What is the interpretation of B2?
b. What is the rate of change of y with respect to X?
c. What is the elasticity of y with respect to X?
d. For the same data, run the regression
Yi = B1 + B2 (1/Xi) + ui
e. Can you compare the r2s of the two models? Why or why not?
f. How do you decide which is a better model?

Transcribed Image Text:

Y 86 79 76 69 65 62 52 51 51 48 X 37 17 25 35 45 55 70 120