Suppose You Have Estimated the Following Regression: Refrigerator Sales_i =

question 36

Multiple Choice

Suppose you have estimated the following regression: Refrigerator Sales_i = β₀ + β₁Price_i + U_i. However, when presenting your results, someone in the audience claims your estimate is biased because your sample only contains sales figures for refrigerators that are priced over $300. Their point is:

• A) correct. You have a selected sample on the Y variable, so your estimate is biased.
• B) correct. You have a selected sample on the X variable, so your estimate is biased.
• C) incorrect. You have a selected sample on Y variable, but this does not bias your estimate.
• D) incorrect. You have a selected sample on X variable, but this does not bias your estimate.

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Definitions:

License

A legal permission granted by an authority to engage in a certain activity or to use a certain property that belongs to someone else.

Sovereign Immunity

A legal doctrine that exempts governments and their agents from being sued without their consent.

Act Of State Doctrine

A principle in international law that shields a nation from being sued in the courts of another nation for its sovereign acts.

Coercive Action

Using force or threats to compel someone to act in a certain way, often violating their freedom or rights.