Under the Least Squares Assumptions for the Multiple Regression Problem

question 32

Multiple Choice

Under the least squares assumptions for the multiple regression problem (zero conditional mean for the error term, all X_i and Y_i being i.i.d., all X_i and u_i having finite fourth moments, no perfect multicollinearity) , the OLS estimators for the slopes and intercept

• A)have an exact normal distribution for n > 25.
• B)are BLUE.
• C)have a normal distribution in small samples as long as the errors are homoskedastic.
• D)are unbiased and consistent.

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Definitions:

Average-Total-Cost Curve

A graphical representation showing how the average total cost of producing a good changes as the quantity produced changes.

Average-Fixed-Cost

The fixed costs of production divided by the quantity of output produced; it decreases as production increases.

Average-Variable-Cost

The total variable cost divided by the quantity of output produced.

Marginal Costs

The investment required to manufacture an incremental unit of a product or service.