As a Project for His Business Statistics Class,a Student Examined $\alpha$

question 18

Multiple Choice

As a project for his business statistics class,a student examined the factors that determined parking metre rates throughout the campus area.Data were collected for the price per hour of parking,blocks to the quadrangle and one of the three jurisdictions: on campus,in downtown and off-campus or outside of downtown and off-campus.The population regression model hypothesised is Y_i = $\alpha$ + $\beta$ ₁x_1i + $\beta$ ₂x_2i + $\beta$ ₃x_3i + $\beta$ _i
Where
Y is the metre price
X₁ is the number of blocks to the quad
X₂ is a dummy variable that takes the value 1 if the metre is located in downtown
And off-campus and the value 0 otherwise
X₃ is a dummy variable that takes the value 1 if the metre is located outside of
Downtown and off-campus,and the value 0 otherwise
Suppose that whether the metre is located on campus is an important explanatory factor.Why should the variable that depicts this attribute not be included in the model?

• A) Its inclusion will introduce autocorrelation.
• B) Its inclusion will inflate the standard errors of the estimated coefficients.
• C) Its inclusion will introduce collinearity.
• D) Both B and

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Definitions:

Classical View

A traditional perspective or theory within a field of study that has been widely accepted or used as a standard for a long period.

Knowledge-based View

A perspective in strategic management that considers knowledge as the most strategically significant resource of a firm.

Typicality Effect

A cognitive phenomenon where more typical members of a category are processed faster and more efficiently than atypical members.

Expertise

The extensive knowledge or skill in a particular area of study, practice, or interest, obtained from experience and education.