When Using the T-Statistic in Multiple Regression to Determine If

question 32

Multiple Choice

When using the t-statistic in multiple regression to determine if a variable should be removed:

• A)R² will increase if the variable is removed.
• B)if |t| > 1, the standard error will decrease.
• C)a large number of independent variables is convenient.
• D)if |t| < 1, the standard error will increase.

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Definitions:

Average Variable Cost

The per-unit variable cost of production, calculated by dividing total variable costs by the quantity of output produced.

Average Total Cost

The total cost of production (fixed plus variable costs) divided by the total quantity of output produced, representing the per unit cost of production.

Price-taker Market

is a market condition where individual sellers or buyers have no control over the price of a product, typically due to the product being homogeneous and market participants being numerous.

Market Demand Curve

A graphical representation that illustrates the total quantity of a particular good or service that consumers in a market are willing to buy at various prices.