The Slope Estimator, β₁, Has a Smaller Standard Error, Other

question 17

Multiple Choice

The slope estimator, β₁, has a smaller standard error, other things equal, if

• A)there is more variation in the explanatory variable, X.
• B)there is a large variance of the error term, u.
• C)the sample size is smaller.
• D)the intercept, β₀, is small.

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Definitions:

Inelastic

A description of a situation where the quantity demanded or supplied changes by a smaller percentage than the changes in price.

Demand Sensitive

Reacting to changes in consumer demand, often affecting pricing and production decisions.

Long-Run Demand

The overall demand for a product or service over an extended period, considering changes in market conditions and preferences.

Short-Run Demand

The demand for goods and services in the immediate future, influenced by current prices and income levels.