Including Irrelevant Independent Variables into the Model

question 16

Multiple Choice

Including irrelevant independent variables into the model:

• A) Will create bias
• B) Will reduce the precision of our estimates.
• C) Will have no negative or positive effect
• D) Will lead to an increase in the error term.

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Definitions:

Geographic Adjustments

Modifications made to prices, wages, or data taking into account the geographical differences such as cost of living or market conditions.

Transportation Costs

Expenses incurred in moving goods or services from one location to another, including shipping, freight, and logistics fees.

Manufacturers

Companies engaged in the production of goods for sale, typically using labor, machinery, and raw materials.