​The Difference Between the LPM Model and the Logit and Probit

question 15

Multiple Choice

​The difference between the LPM model and the logit and probit models is that:

• A)​the LPM assumes constant marginal effects for all the independent variables, while the logit and probit models imply diminishing magnitudes of the partial effects.
• B)​the LPM assumes constant marginal effects for some of the independent variables, while the logit and probit models imply diminishing magnitudes of the partial effects.
• C)​the LPM assumes constant marginal effects for the dependent variable, while the logit and probit models imply diminishing magnitudes of the partial effects.
• D)​the LPM assumes different marginal effects for all independent variables, while the logit and probit models imply diminishing magnitudes of the marginal effects.

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Definitions:

Equilibrium

A condition or state in which economic forces are balanced, such as the point where supply equals demand.

Market Clear

A situation in which the market reaches a state where quantity supplied equals quantity demanded, leaving no surplus or shortage.

Surplus

An excess of income or assets over expenditure or liabilities in a given period, typically a fiscal year, leading to available resources beyond what is required.

Supply Schedule

A table that shows the quantity of a good or service that producers are willing to supply at various prices.