When Should a Probit Model Be Used

question 1

Multiple Choice

When should a probit model be used?

• A)when you need a binary choice model that allows for varying marginal effects
• B)when you need to model the heteroskedasticity in the linear probability model
• C)to allow for endogenous regressors in a binary choice model
• D)to allow for multiple explanatory variables in a binary choice model

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Definitions:

Average Purchase

Typically refers to the average amount spent by customers on products or services over a specific period, useful for analyzing consumer behavior and planning inventory.

Inbound Transportation

The process and cost of transporting goods from suppliers to the premises of a business.

Sales

The activities involved in selling products or services, often measured by the amount of revenue generated from transactions with customers.

Cost of Goods Sold

An accounting term for the direct costs attributable to the production of the goods sold in a company, including both raw materials and labor expenses.