In Estimating the Linear Probability Model for Whether an Individual

question 33

Multiple Choice

In estimating the linear probability model for whether an individual clicked through on an advertisement based off how much time the individual spent on the website, the regression results are as follows: ClickThrough_i = 0.4(0.08) + 0.07(0.01) TimeSpent_i, where the standard errors of each coefficient are reported in parenthesis. Why would the fact that someone in the sample was on the website for 10 hours be problematic?

• A) It suggests the outcome is measured with error.
• B) It suggests that you have a non-representative sample.
• C) The prediction for that individual will fall above 1 (the maximum of ClickThrough).
• D) It suggests that the errors are heteroscedastic.

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Definitions:

Ledger

A comprehensive collection of a company's accounts that records all transactions and is used to prepare financial statements.