In Order to Use the T-Statistic for Hypothesis Testing and Constructing

question 25

Multiple Choice

In order to use the t-statistic for hypothesis testing and constructing a 95% confidence interval as $\pm$ 1.96 standard errors, the following three assumptions have to hold:

• A)the conditional mean of u_i, given X_i is zero; (X_i,Y_i), i = 1,2, …, n are i.i.d. draws from their joint distribution; X_i and u_i have four moments
• B)the conditional mean of u_i, given X_i is zero; (X_i,Y_i), i = 1,2, …, n are i.i.d. draws from their joint distribution; homoskedasticity
• C)the conditional mean of u_i, given X_i is zero; (X_i,Y_i), i = 1,2, …, n are i.i.d. draws from their joint distribution; the conditional distribution of u_i given X_i is normal
• D)none of the above

Differentiate between sampling with and without replacement in the context of bootstrapping.

Recognize the minimum number of resamples required to compute a reliable bootstrap confidence interval and estimate the standard error.

Understand the distinction between direct and indirect costs and their traceability to cost objects.

Recognize the classification and behaviors of costs such as variable, fixed, and period costs in relation to production volume.