The General Answer to the Question of Choosing the Scale

question 14

Multiple Choice

The general answer to the question of choosing the scale of the variables is

• A)dependent on you whim.
• B)to make the regression results easy to read and to interpret.
• C)to ensure that the regression coefficients always lie between -1 and 1.
• D)irrelevant because regardless of the scale of the variable, the regression coefficient is unaffected.

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Definitions:

Price Falls

A decrease in the market price of goods or services, often due to increased supply, decreased demand, or external market factors.

Conditions

Refers to the various circumstances or parameters that affect economic models, decision-making processes, or market states.

Utility Function

A mathematical model that represents a consumer's preference ranking over bundles of goods or outcomes, quantifying the level of satisfaction or happiness derived.

Budget Constraint

Represents the combinations of goods and services that a consumer can afford to purchase given current prices and their income level.