The Normal Approximation to the Sampling Distribution Of $\widehat { \beta } _ { 1 }$

question 15

Multiple Choice

The normal approximation to the sampling distribution of $\widehat { \beta } _ { 1 }$ is powerful because

• A) many explanatory variables in real life are normally distributed.
• B) it allows econometricians to develop methods for statistical inference.
• C) many other distributions are not symmetric.
• D) is implies that OLS is the BLUE estimator for \(\beta _ { 1 }\)

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Definitions:

Opportunity Costs

The cost of forgoing the next best alternative when making a decision, crucial in evaluating the true cost of any economic choice.

Law of Increasing Costs

An economic principle stating that as the production of one good increases, the opportunity cost of producing an additional unit of this good also increases, assuming all resources are fully utilized.

Capacity Utilization Rate

A measure of how efficiently a firm or economy is using its productive capacity, often expressed as a percentage of total potential output.

Full Capacity

The maximum level of output that a company can produce and supply under normal conditions.