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[link] shows a recent graduate’s credit card balance each month after graduation.

Month 1 2 3 4 5 6 7 8
Debt ($) 620.00 761.88 899.80 1039.93 1270.63 1589.04 1851.31 2154.92
  1. Use exponential regression to fit a model to these data.
  2. If spending continues at this rate, what will the graduate’s credit card debt be one year after graduating?
  1. The exponential regression model that fits these data is y = 522.88585984 ( 1.19645256 ) x .
  2. If spending continues at this rate, the graduate’s credit card debt will be $4,499.38 after one year.
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Is it reasonable to assume that an exponential regression model will represent a situation indefinitely?

No. Remember that models are formed by real-world data gathered for regression. It is usually reasonable to make estimates within the interval of original observation (interpolation). However, when a model is used to make predictions, it is important to use reasoning skills to determine whether the model makes sense for inputs far beyond the original observation interval (extrapolation).

Building a logarithmic model from data

Just as with exponential functions, there are many real-world applications for logarithmic functions: intensity of sound, pH levels of solutions, yields of chemical reactions, production of goods, and growth of infants. As with exponential models, data modeled by logarithmic functions are either always increasing or always decreasing as time moves forward. Again, it is the way they increase or decrease that helps us determine whether a logarithmic model is best.

Recall that logarithmic functions increase or decrease rapidly at first, but then steadily slow as time moves on. By reflecting on the characteristics we’ve already learned about this function, we can better analyze real world situations that reflect this type of growth or decay. When performing logarithmic regression analysis , we use the form of the logarithmic function most commonly used on graphing utilities, y = a + b ln ( x ) . For this function

  • All input values, x , must be greater than zero.
  • The point ( 1 , a ) is on the graph of the model.
  • If b > 0 , the model is increasing. Growth increases rapidly at first and then steadily slows over time.
  • If b < 0 , the model is decreasing. Decay occurs rapidly at first and then steadily slows over time.

Logarithmic regression

Logarithmic regression is used to model situations where growth or decay accelerates rapidly at first and then slows over time. We use the command “LnReg” on a graphing utility to fit a logarithmic function to a set of data points. This returns an equation of the form,

y = a + b ln ( x )

Note that

  • all input values, x , must be non-negative.
  • when b > 0 , the model is increasing.
  • when b < 0 , the model is decreasing.

Given a set of data, perform logarithmic regression using a graphing utility.

  1. Use the STAT then EDIT menu to enter given data.
    1. Clear any existing data from the lists.
    2. List the input values in the L1 column.
    3. List the output values in the L2 column.
  2. Graph and observe a scatter plot of the data using the STATPLOT feature.
    1. Use ZOOM [9] to adjust axes to fit the data.
    2. Verify the data follow a logarithmic pattern.
  3. Find the equation that models the data.
    1. Select “LnReg” from the STAT then CALC menu.
    2. Use the values returned for a and b to record the model, y = a + b ln ( x ) .
  4. Graph the model in the same window as the scatterplot to verify it is a good fit for the data.

Questions & Answers

it is the relatively stable flow of income
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Divine Reply
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SHEDRACK Reply
what is Flexible exchang rate?
poudel Reply
is gdp a reliable measurement of wealth
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introduction to econometrics
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Tom
Why is unemployment rate never zero at full employment?
Priyanka Reply
bcoz of existence of frictional unemployment in our economy.
Umashankar
what is flexible exchang rate?
poudel
due to existence of the pple with disabilities
Abdulraufu
the demand of a good rises, causing the demand for another good to fall
Rushawn Reply
is it possible to leave every good at the same level
Joseph
I don't think so. because check it, if the demand for chicken increases, people will no longer consume fish like they used to causing a fall in the demand for fish
Anuolu
is not really possible to let the value of a goods to be same at the same time.....
Salome
Suppose the inflation rate is 6%, does it mean that all the goods you purchase will cost 6% more than previous year? Provide with reasoning.
Geetha Reply
Not necessarily. To measure the inflation rate economists normally use an averaged price index of a basket of certain goods. So if you purchase goods included in the basket, you will notice that you pay 6% more, otherwise not necessarily.
Waeth
discus major problems of macroeconomics
Alii Reply
what is the problem of macroeconomics
Yoal
Economic growth Stable prices and low unemployment
Ephraim
explain inflationcause and itis degre
Miresa Reply
what is inflation
Getu
increase in general price levels
WEETO
Good day How do I calculate this question: C= 100+5yd G= 2000 T= 2000 I(planned)=200. Suppose the actual output is 3000. What is the level of planned expenditures at this level of output?
Chisomo Reply
how to calculate actual output?
Chisomo
how to calculate the equilibrium income
Beshir
Criteria for determining money supply
Thapase Reply
who we can define macroeconomics in one line
Muhammad
Aggregate demand
Mohammed
C=k100 +9y and i=k50.calculate the equilibrium level of output
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money as unit of account means what?
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A unit of account is something that can be used to value goods and services and make calculations
Jim
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Muhammad
I want to know how can we define macroeconomics in one line
Muhammad
it must be .9 or 0.9 no Mpc is greater than 1 Y=100+.9Y+50 Y-.9Y=150 0.1Y/0.1=150/0.1 Y=1500
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Kalombe
hi can someone help me on this question If a negative shocks shifts the IS curve to the left, what type of policy do you suggest so as to stabilize the level of output? discuss your answer using appropriate graph.
Galge Reply
if interest rate is increased this will will reduce the level of income shifting the curve to the left ◀️
Kalombe
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Source:  OpenStax, Algebra and trigonometry. OpenStax CNX. Nov 14, 2016 Download for free at https://legacy.cnx.org/content/col11758/1.6
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