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Exercise

Average marginal effects

The logistic response function is essentially nonlinear. Therefore, it is not immediately clear what is the effect of a unit change in the price ratio on the probability that a customer purchases Hoppiness. A solution is to interpret the effect of a unit change averaged over all customers.

This average marginal effect can be derived by using the function margins(). The function is loaded from the add-on package margins. Finally, you will compare the average marginal effect for price.ratio of the logistic.model to the price.ratio coefficient of the probability.model.

Instructions

100 XP
  • Load the add-on package margins by using the function library().
  • Obtain the price.ratio coefficient for the probability.model by using the function coef().
  • Obtain the marginal effect for price.ratio of the logistic.model by using the function margins().