Simultaneous Equations Present a Challenge Because OLS Estimates

question 8

Multiple Choice

Simultaneous equations present a challenge because OLS estimates

• A)do not properly weight the data for the undue influence of outliers.
• B)do not account for the autoregressive structure of the error term.
• C)treat the dependent variable as a continuous variable.
• D)are biased because one or more right hand side variables from each equation are correlated with the error term due to the equations being jointly determined.

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Definitions:

Per Unit

A measurement expressing costs, profits, or other economic variables on a per-unit basis.

Variable Costing

A costing method that includes only variable costs (direct materials, direct labor, and variable overhead) in the cost of goods sold, treating fixed costs as period costs.

Product Cost

The total expenses incurred to produce a product, including labor, materials, and overhead.

Per Unit

A term referring to the cost or price of a single item or service when discussing bulk production or sales.