Which of the Following Statements Is True

question 9

Multiple Choice

Which of the following statements is true?

• A)The use of 2SLS is applicable to simultaneous equations model with at most two equations.
• B)Identification of simultaneous equations with three or more equations is based on matrix algebra.
• C)2SLS method used in the estimation of simultaneous equations is an example of a system estimation method.
• D)The maximum number of equations permissible for a simultaneous equations model is four.

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Definitions:

MC

Marginal Cost, the increase in cost that arises from producing one additional unit of a good or service.

Fixed Costs

Costs that do not vary with the level of production or sales, such as rent, salaries, and insurance.

AVC

Stands for Average Variable Cost, which is the total variable costs divided by the quantity of output produced.

Total Revenue

The sum of income a company receives from its business activities, usually from the sale of goods and services to customers.