In a Quasi-Experiment A $\Delta Y$ You Need to Use $\left( \bar { Y } ^ { \text {after } } - \lambda \times \bar { Y } ^ { \text {before } } \right)$

question 19

Short Answer

In a quasi-experiment a. quasi differences are used, i.e., instead of $\Delta Y$ you need to use $\left( \bar { Y } ^ { \text {after } } - \lambda \times \bar { Y } ^ { \text {before } } \right)$ , where $0 < \lambda < 1$ .
b. randomness is introduced by variations in individual circumstances that make it appear as if the treatment is randomly assigned.
c. the causal effect has to be estimated through quasi maximum likelihood estimation.
d. the $t$ -statistic is no longer normally distributed in large samples.

---

Definitions:

Variable Cost

Costs that vary directly with the level of production or sales volume, such as materials and labor, in contrast to fixed costs which remain constant regardless of production level.

Transfer Price

The price charged for goods or services transferred between departments or subsidiaries within the same company.

Opportunity Cost

The price paid for not choosing the subsequent optimal alternative during decision-making.

Lost Contribution Margin

The profit forgone by not manufacturing or selling a product, represented by the contribution margin that would have been earned on each unit.