If You Had a Two Regressor Regression Model, Then Omitting

question 18

Multiple Choice

If you had a two regressor regression model, then omitting one variable which is relevant

• A)will have no effect on the coefficient of the included variable if the correlation between the excluded and the included variable is negative.
• B)will always bias the coefficient of the included variable upwards.
• C)can result in a negative value for the coefficient of the included variable, even though the coefficient will have a significant positive effect on Y if the omitted variable were included.
• D)makes the sum of the product between the included variable and the residuals different from 0.

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Definitions:

Competitive Market

A market structure characterized by a large number of buyers and sellers, where no single entity can dictate the market price.

Government Regulation

Laws and rules established by governments to control the behavior of businesses and individuals to achieve policy objectives.

Binding

A term used to describe an agreement, rule, or law that is legally or contractually enforceable, requiring adherence by the parties involved.

Equilibrium Price

The cost at which the amount of a product available matches the amount of the product desired.