Which of the Following Statements Is True

question 19

Multiple Choice

Which of the following statements is true?

• A)Fixed effects estimation is not suitable when the unobserved cluster effect is correlated with one or more explanatory variables.
• B)Fixed effects approach is not applicable if the key explanatory variables change only at the level of the cluster.
• C)The ordinary least squares standard errors are incorrect when there is cluster effect.
• D)Random effects estimation can be applied to a cluster sample only if the unobserved cluster effect is correlated with one or more explanatory variables.

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Definitions:

Cost Of Goods Sold

The total cost directly associated with producing goods sold by a business, including materials and labor.

Perpetual Inventory System

An inventory system under which the company keeps detailed records of the cost of each inventory purchase and sale, and the records continuously show the inventory that should be on hand.

FIFO Method

An inventory valuation method that assumes the first items placed into inventory are the first sold, thus expenses are based on the oldest costs.

Latest Goods On Hand

Refers to the most recent inventory of products or materials that a company has available for use or sale.