Which of the Following Equations Best Reflects a Linear Model

question 12

Multiple Choice

Which of the following equations best reflects a linear model?

• A) outcome_i = (b₁X₁) + error_i
• B) outcome_i = (b₁ error_i) _* X₁
• C) outcome_i = (b₁X₁) / error_i
• D) outcome_i = (b₁X₁) × error_i

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Definitions:

Willing To Pay

Willing to pay is the maximum amount that a consumer is prepared to spend on a good or service.

Consumer Surplus

The difference between the total amount that consumers are willing and able to pay for a good or service versus the total amount they actually pay.

Producer Surplus

The difference between what producers are willing to accept for a product versus what they actually receive in the market.

Marginal Benefit

The increased benefit or value received from the consumption or creation of one more unit of a good or service.