Below Is a Scatterplot of Size of Company Bonuses (Y)

question 9

Multiple Choice

Below is a scatterplot of size of company bonuses (Y) by number of employees at the company (X) for unionized and non-unionized employees.What does the scatterplot suggest?

• A)Using Union as an indicator variable in this model is appropriate.
• B)Using the interaction term Employees*Union in the model is appropriate.
• C)Union should not be included in the model as a variable.
• D)Employees should not be included in the model as a variable.
• E)None of the above.

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Definitions:

Equilibrium Price

The market valuation where the supply of products equals the demand for products.

Gains From Trade

The benefits that parties obtain from engaging in voluntary trading, often leading to an increase in overall welfare and efficiencies.

Consumer Surplus

The mismatch between the aggregate amount consumers intend and can afford to pay for a product or service and the aggregate amount they really pay.

Producer Surplus

The difference between the amount a producer is willing to accept for a good versus what they actually receive in the market.