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:

Labor Productivity

refers to the amount of goods and services produced by one hour of labor.

Profit-sharing Bonuses

A type of incentive where employees receive additional compensation based on the company's profits, encouraging ownership behavior and aligning interests.

Non-management Employees

Individuals within an organization who do not hold managerial or supervisory positions and are responsible for executing tasks and operations as directed by management.

Piece Rate Pay

A compensation system where employees are paid based on the quantity of units they produce or complete.