Environmental Biologists Studying the Relationship Between the Number of Owls

question 12

Multiple Choice

Environmental biologists studying the relationship between the number of owls in a forested region and the number of field mice in the region believe that the deterministic component of the relationship is a straight line. A scatterplot shows that even though the general trend is linear, the points do not fall exactly on a straight line. Which of the following factors might account for the random component of this regression model?

• A)Different size owls might affect the number of mice eaten.
• B)Variability might appear in the instrument used to count mice.
• C)Variation in the size of the mice might cause variation in the amount of mice consumed by owls.
• D)All of the above are possible factors that could account for the random component of the regression model.

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Definitions:

Adverse Selection

A situation in insurance and finance where higher-risk individuals are more likely to apply for or select a particular service, leading to potential losses for the insurer or lender.

Hidden Actions

Pertains to situations in principal-agent relationships where agents' specific actions are not observable by the principal, leading to a moral hazard.

Hidden Information

Information that is not known to one party in a transaction, which can lead to an imbalance of power or adverse selection.

Moral Hazard

A situation where one party is more likely to take risks because another party bears the consequences of those risks, often arising in insurance and finance contexts.