Use the Following to Answer Question

question 66

Multiple Choice

Use the following to answer question:
Figure: Correcting for Market Failure
-(Figure: Correcting for Market Failure) Use Figure: Correcting for Market Failure.There is an external cost in the market illustrated in the figure,and the two upward-sloping lines reflect private and social marginal costs.When the government intervenes to correct for the external cost,the output will _____ from _____ to _____.

• A)fall;W;R
• B)increase;W;R
• C)fall;R;W
• D)fall;W;0

---

Definitions:

Standardized Residual

The value obtained by dividing a residual by its standard deviation.

Studentized Deleted Residuals

Standardized residuals that are based on a revised standard error of the estimate obtained by deleting observation i from the data set and then performing the regression analysis and computations.

Residual Transformation

Residual transformation involves altering the residuals from a data model, possibly to meet the assumptions of linear regression such as normality or homoscedasticity.

Estimated Regression Equation

A formula that models the relationship between one or more independent variables and a dependent variable.