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In order to understand the basic working and application of the model, let us start with two variable model
Two-variable Regression model
To find out the relation between two variables X & Y, usually a linear relation is estimated. If it is non-linear one then we convert it into log-linear to estimate the equation. Among the scatter of points in plane X-Y, we try to fit in the best line that can estimate the relationship. Here Y is the dependent variable and X is the independent variable. Let us take the example given in Salvatore. Let demand be the function of advertisement expenditure by the particular firm...
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