The Variance of 2SLS Bj Will Be Lower If

question 7

Multiple Choice

The variance of 2SLS Bj will be lower if:

• A) If we have a weak instrument
• B) If we have a worse fit at the first stage of the regression
• C) If the instrument has a high explanatory power for X
• D) If we have a smaller sample size

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Definitions:

Monopolist

An entity or individual that has exclusive control over the supply of a good or service, enabling them to manipulate market prices.

Unregulated Monopolists

A single supplier in a market without government intervention or regulation, potentially leading to higher prices and lower outputs.

Marginal Cost

The additional cost incurred when producing one more unit of a good or service.