Based on the R² and R², which model is the better fit?O Both models explain the same amount of variation in the dependent variable.O Model 2 is the best fit.You cannot use the R-squared and adjusted R-squared to make this determination in this situation.O Model 1 is the best fit. 8. Using adjusted R-squared to choose between nonnested modelsConsider the following two models relating wages and education:Model 1wage = Bo + Bieduc + B2 educ² + uwhereandR² = 0.393R2 = 0.048Model 2log (wage) Bo + Bieduc + B2 educ² + uwhereR2 = 0.432R²= 0.009

R-Squared is a statistical measure which lies between 0 to 100 and depicts the percentage of…

Consider the following two models relating wages and education: Model 1 wage Bo + Bieduc + B2 educ² + u where and R2 -0.393 R2 0.048 Model 2 log (wage) Bo + Bieduc + B2 educ² + u where R2=0.432 -0.009 R²

Consider the following two models relating wages and education: Model 1 wage Bo + Bieduc + B2 educ² + u where and R2 -0.393 R2 0.048 Model 2 log (wage) Bo + Bieduc + B2 educ² + u where R2=0.432 -0.009 R²

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

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Question

Based on the R² and R², which model is the better fit?
O Both models explain the same amount of variation in the dependent variable.
O Model 2 is the best fit.
You cannot use the R-squared and adjusted R-squared to make this determination in this situation.
O Model 1 is the best fit.

8. Using adjusted R-squared to choose between nonnested models
Consider the following two models relating wages and education:
Model 1
wage = Bo + Bieduc + B2 educ² + u
where
and
R² = 0.393
R2 = 0.048
Model 2
log (wage) Bo + Bieduc + B2 educ² + u
where
R2 = 0.432
R²= 0.009

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