Instrument Relevance

question 5

Multiple Choice

Instrument relevance

• A)means that the instrument is one of the determinants of the dependent variable.
• B)is the same as instrument exogeneity.
• C)means that some of the variance in the regressor is related to variation in the instrument.
• D)is not possible since X and u are correlated and Z and u are not correlated.

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Definitions:

Machining Department

A specific division within a manufacturing facility where machining processes such as cutting, drilling, or milling are performed on workpieces to produce finished parts.

Overhead Rates

Ratios used to allocate indirect costs to products or services, based on a predetermined activity base such as labor hours or machine hours.

Machine-Hours

A measure of production time, referring to the total hours that machinery is operated in the manufacturing process.

Predetermined Overhead Rate

A rate calculated before a period begins, used to allocate manufacturing overhead to products based on a certain activity base.