Why is the use of polynomial functional forms typical in trying to estimate non-linear functional forms?
A) They yield more efficient estimates than other non-linear functional forms.
B) They offer a high degree of flexibility.
C) They provide coefficients that have elasticities as interpretations.
D) They have standard errors that are easier to interpret.

Question

Quizplus · Accepted Answer

Polynomial functional forms offer a high degree of flexibility when estimating non-linear functional forms. They can capture a wide range of shapes and have multiple coefficients that can be adjusted to fit different data patterns.

Why Is the Use of Polynomial Functional Forms Typical in Trying