Suppose that Person A earns $35,000 per year and Person B earns $42,000. (i) Find the exact percentage by which Person B’s salary exceeds Person A’s. (ii) Now, use the difference in natural logs to find the approximate percentage difference.

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Q: How much of the variation in prices are explained by these characteristics?

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Estimation

A new framework of data analysis where the new statistical methods are used for interpreting the results and analyzing the data is known as estimation in statistics.