An "Omitted Variable" Is

question 26

Multiple Choice

An "omitted variable" is

• A)a variable which is purposely omitted from an economic analysis.
• B)a variable which is inadvertently omitted from an economic analysis.
• C)a variable that has no impact on other variables in an economic analysis.
• D)a variable that affects other variables and its omission from economic analysis can lead to false conclusions about cause and effect.

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Definitions:

Demand Schedule

A table that shows the quantity of a product or service demanded at various prices.

Profit-maximizing

A strategy in business where the main goal is to increase profits to the highest possible level given the constraints of the market.

Elastic Segment

A portion of the demand curve where the quantity demanded is highly sensitive to changes in price.

Demand Curve

A graphical representation of the relationship between the price of a good and the quantity of it that consumers are willing to purchase at various prices.