Which of the Following Is the Reason Why Standard Errors

question 9

Multiple Choice

Which of the following is the reason why standard errors measured by OLS differ from standard errors measured through Prais-Winsten transformation?

• A)OLS standard errors account for serial correlation, whereas Prais-Winsten estimations do not.
• B)Prais-Winsten standard errors account for serial correlation, whereas OLS estimations do not.
• C)Prais-Winsten standard errors account for heteroskedasticity, whereas OLS estimations do not.
• D)OLS standard errors account for heteroskedasticity, whereas Prais-Winsten estimations do not.

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Definitions:

Long-Run Average Cost Curve

A curve showing the minimum average cost at which a firm can produce any given level of output in the long term, when all inputs are variable.

Small Firms

Small firms are businesses with a relatively small number of employees, limited revenue, and a localized operational base, often contributing significantly to innovation and employment.

Economies of Scale

Cost benefits that companies gain from their operation size, where the cost for each unit of production typically falls as the scale expands.

Constant Returns to Scale

A situation in production where increasing all inputs by a certain factor results in output increasing by the same factor.