How do you interpret the estimated value of coefficient of EDU in the following equation: ln(SALARY)= 1 + 0.02ln(EDU)

where SALARY is annual salary (in thousands) and EDU is years of education?

a.
we predict that 1 year increase in years of education leads to $2000 increase in salary

b.
we predict that 1% increase in years of education leads to 2% increase in salary

c.
we predict that 1 year increase in years of education leads to 2% increase in salary

d.
we predict that 1% increase in years of education leads to 0.02% increase in salary

The correct option is d

Step-by-step explanation:

From the question we are told that

The equation is

generally

=>

Apply log rules

=>

=>

When EDU is increase by 1% we have that

=>

So the new SALARY will now be

The ratio by which the new SALARY will increase is obtain by dividing the value of new SALARY (SALARY'' ) with that of the former SALARY (SALARY) and this mathematically represented as

=>

Generally the percentage increase of salary is mathematically evaluated as

=>

=>

x^6

step-by-step explanation:

this is correct because:

x-6=0

0*x=0

so

x^6

arrange the equations with like terms in columns.

analyze the coefficients of x or y.

add the equations and solve for the remaining variable.

substitute the value into either equation and solve.

check the solution.

step-by-step explanation: