Which of the Following Problems Can Arise in Policy Analysis

question 7

Multiple Choice

Which of the following problems can arise in policy analysis and program evaluation using a multiple linear regression model?

• A)There exists homoskedasticity in the model.
• B)The model can produce predicted probabilities that are less than zero and greater than one.
• C)The model leads to the omitted variable bias as only two independent factors can be included in the model.
• D)The model leads to an overestimation of the effect of independent variables on the dependent variable.

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Definitions:

Variable Costs

Costs that vary depending on how much is produced or sold.

Break-Even Point

The production level or sales volume at which total revenues equal total expenses, resulting in no net loss or gain.

Contribution Margin

The amount remaining from sales revenue after variable costs are deducted, contributing to covering fixed costs and generating profit.

Break-Even Point

The financial point at which costs equal revenues, so there is no net loss or gain.