You Need to Adjust $S _ { \hat { u } } ^ { 2 }$

question 13

Multiple Choice

You need to adjust $S _ { \hat { u } } ^ { 2 }$ by the degrees of freedom to ensure that $s _ { \hat { u } } ^ { 2 }$ is

• A) an unbiased estimator of \(\sigma _ { u } ^ { 2 }\)
• B) a consistent estimator of \(\sigma _ { u } ^ { 2 }\)
• C) efficient in small samples.
• D) F -distributed.

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Definitions:

Average Cost

The total cost divided by the number of goods produced, representing the cost per unit of output.

Long Run

A period of time in economics during which all factors of production and costs are variable, allowing for full adjustment to changes.

Short Run

Period of time in which quantities of one or more production factors cannot be changed.

Long Run Equilibrium

Long run equilibrium occurs when all inputs can be adjusted by firms, markets are perfectly competitive, and economic profit is zero, leading to a situation where firms just cover their opportunity costs.