Forty-Eight Observations of a Dependent Variable and Five Independent Variables

question 21

Short Answer

Forty-eight observations of a dependent variable and five independent variables resulted in an SSE of 438. When two additional independent variables were added to the model, the SSE was reduced to 375. At a 5% level of significance, determine whether or not the two added independent variables contribute significantly to the model.

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Definitions:

Economic Profit

The distinction in totality between incomes and costs, inclusive of both transparent and concealed expenses.

Long Run

A period in economics where all factors of production and costs are variable, allowing for full industry adjustment.

Economies of Scale

Economies of Scale refer to the cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale.

Barriers to Entry

Obstacles that make it difficult for new competitors to enter a market.