Chapter Summary
Regression equations use transformations of the original variables to describe patterns that curve. Equations with reciprocals and logs are useful in many business applications and are readily interpretable. Nonlinear equations that use these transformations allow the slope to change, implying that the estimated effects of changes in the explanatory variable on the average response depend on the value of the explanatory variable. The slope in a regression equation that uses logs of both the response and the explanatory variable is the elasticity of the response with respect to price.
Key Terms
Objectives
Recognize the presence of curved patterns in models and data and pick an appropriate ...
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