Suppose You Have Two Departments and Have Daily Data on Complaints

question 12

Multiple Choice

Suppose you have two departments and have daily data on complaints and number of products they oversee for the departments over two years. In the second year, you increased the number of products under the scope of department #2 by 10. To estimate the effect of this increase in the number of products, you estimate the following regression: Complaints_it = α + β₁ × Department #2_it + β₂ × Year2_it + β₃ × Department #2_it × Year2_it + U_it. Which coefficient controls for non-time varying effects that make department #1 have more complaints than department #2?

• A) β₁
• B) β₂
• C) α + β₃
• D) β₃

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Definitions:

Type II Error

The error that occurs when a false null hypothesis is not rejected.

Type I Error

A Type I Error occurs when a true null hypothesis is incorrectly rejected, also known as a "false positive".

Binomial Population

A population in which each member of the population has only two possible outcomes or states, often conceptualized as success or failure.

Population Proportion

The fraction or percentage of individuals in a population who possess a particular attribute or characteristic.