Heteroskedasticity Is a Violation of Which Assumption of the MR $\sigma$

question 13

Multiple Choice

Heteroskedasticity is a violation of which assumption of the MR model?

• A)The values of each x_ik are not random and are not exact linear functions of the other explanatory variables
• B)var(y_i. )= var(e_i)= \(\sigma\)²
• C)E(y_i)= \(\beta\)₁ + \(\beta\)₂x_i2 + \(\beta\)₃x_i3 + …….+ \(\beta\)_kx_ik,⟺E(e_i)= 0
• D)cov(y_i,y_j)= cov(e_i,e_j)= 0; (i≠j)

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Definitions:

Allocative Efficiency

Refers to a market situation where resources are apportioned in the most efficient manner, allowing for the optimal combination of goods and services production to meet consumer preferences.

Consumer Surplus

The variance between the aggregate sum consumers are prepared and capable of spending for a product or service and the aggregate sum they end up paying.

Producer Surplus

The difference between the amount producers are willing to accept for a good or service and the actual amount they receive following trade.

Marginal Benefit

The boost in pleasure or utility a person gets from purchasing one more unit of a product or service.