Assume That You Have Collected a Sample of Observations from Over

question 8

Multiple Choice

Assume that you have collected a sample of observations from over 100 households and their consumption and income patterns. Using these observations, you estimate the following regression C_i = ?₀+?₁Y_i+ u_i where C is consumption and Y is disposable income. The estimate of ?₁ will tell you

• A) \(\frac { \Delta \text {Income } } { \Delta \text { Consumption } }\)
• B)The amount you need to consume to survive
• C) \(\frac { \text { Income } } { \text { Consumption } }\)
• D) \(\frac { \Delta \text { Consumption } } { \Delta \text { Income } }\)

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Definitions:

Gross Profit Method

An inventory estimation method used to calculate the cost of goods sold and ending inventory, based on gross profit margins.

Market Value

Today's selling or buying price for services or assets in a trading environment.

Lower Of Cost

An accounting principle ensuring that inventory is reported at the lower of its original cost or its market value if the market value is less.

Market Rule

A guideline or principle applied to assess the acceptability, pricing, or regulation of goods and services in a market.