The Number of Dummy Variables Representing a Qualitative Variable Should

question 51

Multiple Choice

The number of dummy variables representing a qualitative variable should be ________.

• A) one less than the number of categories of the variable
• B) two less than the number of categories of the variable
• C) the same number as the number of categories of the variable
• D) None of these choices is correct.

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Definitions:

Market Output

The total quantity of a good or service produced and sold by firms in a particular market.

Intertemporal Price Discrimination

A pricing strategy where prices are varied over time for the same product to exploit differences in willingness to pay.

Second-Degree Price Discrimination

A pricing strategy where prices vary according to the quantity consumed or the version of the product, without personal characteristics of the buyer influencing the price.

First-Degree Price Discrimination

A pricing strategy where a seller charges each buyer their maximum willingness to pay, capturing all consumer surplus.